Philippine Compliance with the Revised Kyoto Convention

Economic Modernization through Efficient Reforms and Governance Enhancement (EMERGE) Unit 2003 139 Corporate Center 139 Valero St Salcedo Village Makati City 1227 Philippines

Tel No (632) 752 0881 Fax No (632) 752 2225

Technical Report Philippine Compliance with the Revised Kyoto Convention by Parayno Consultancy Services

Prepared for

Fernando P Cala II Executive Director Export Development Council (EDC)

Republic of the Philippines Submitted for review to USAIDPhilippines OEDG

February 28 2007

EMERGE Preface

This report is the result of technical assistance provided by the Economic Modernization through Efficient Reforms and Governance Enhancement (EMERGE) Activity under contract with the CARANA Corporation Nathan Associates Inc and The Peoples Group (TRG) to the United States Agency for International Development Manila Philippines (USAIDPhilippines) (Contract No AFP-I-00-00-03-00020 Delivery Order 800) The EMERGE Activity is intended to contribute towards the Government of the Republic of the Philippines (GRP) Medium Term Philippine Development Plan (MTPDP) and USAIDPhilippinesrsquo Strategic Objective 2 ldquoInvestment Climate Less Constrained by Corruption and Poor Governancerdquo The purpose of the activity is to provide technical assistance to support economic policy reforms that will cause sustainable economic growth and enhance the competitiveness of the Philippine economy by augmenting the efforts of Philippine pro-reform partners and stakeholders By letter dated 25 November 2005 Fernando P Cala II Executive Director of the Philippine Export Development Council (EDC) requested assistance from EMERGE and the Partnership and Advocacy for Competitiveness and Trade (PACT) which is a grant project implemented for USAID by the DLSU-Angelo King Institute for Economic and Business Studies in partnership with Philippine Exporters Confederation Inc (PhilExport) for research and advocacy about Philippine compliance with the Revised Kyoto Convention (RKC) which was to enter into force on February 3 2006 PACT and EMERGE engaged the Parayno Consultancy Services for this purpose in June 2006 The views expressed and opinions contained in this publication are those of the authors and are not necessarily those of USAID the GRP EMERGE or the latterrsquos parent organizations

PROJECT RESEARCH AND ADVOCACY SUPPORT FOR TRADE FACILITATION PHILIPPINE COMPLIANCE WITH THE REVISED KYOTO CONVENTION (ldquoRKCrdquo)

PROPOSED NATIONAL STRATEGY FOR PHILIPPINE COMPLIANCE TO THE INTERNATIONAL CONVENTION ON THE SIMPLIFICATION AND

HARMONIZATION OF CUSTOMS PROCEDURES OTHERWISE KNOWN AS THE REVISED KYOTO CONVENTION (ldquoRKCrdquo)

Submitted by

PARAYNO CONSULTANCY SERVICES

February 2007

Abbreviation

AFTA ASEAN Free Trade Agreement AO Administrative Order APEC Asian Pacific Economic Cooperation ASEAN Association of South East Asian Nations ATA BOC Bureau of Customs BOI Board of Investments CAO Customs Administrative Order CCC Customs Cooperation Council CEPT CMBW Customs Manufacturing Bonded Warehouse CMO Customs Memorandum Order CO Certificate of Origin DOF Department of Finance DSWD Department of Social Welfare and Development EO Executive Order GRP Government of the Republic of the Philippines ICAO ICT Information and Communication Technology IFM IRR Implementing Rules and Regulations KC International Convention on the Simplification and

Harmonization of Customs Procedures or Kyoto Convention

KCMT Kyoto Convention Management Team MOA Memorandum of Agreement MOU Memorandum of Understanding NAIA Ninoy Aquino International Airport NIRC National Internal Revenue Code PACT Partnership and Advocacy for Competitiveness and

Trade PD Presidential Decree PEZA Philippine Economic Zone Authority PHILEXPORT Philippine Exporters Confederation Inc RA Republic Act RKC Revised Kyoto Convention SAD Single Administrative Document SARO Special Allotment Release Order Sec Section SITA TCCP Tariff and Customs Code of the Philippines TWM Trade World Management UN United Nations UNECE VASP Value Added Service Provider VAT Value Added Tax WCO World Customs Organization WTO World Trade Organization

TABLE OF CONTENT

Preface Executive Summary 10 Introduction

11 The World Customs Orgnization 12 Kyoto Convention (ldquoKCrdquo) 13 Rationale for Revising the KC 14 Revised Kyoto Convention (ldquoRKCrdquo) 15 Philippines vis-agrave-vis the KC 16 Consequence of Philippine Non-accession of the KC 17 Compliance versus Accession Differences 18 Accession 19 Benefits Expected from Trading With Countries that are RKC Compliant 110 RKC Structure

1101 General Annex 1102 Specific Annexes and their Chapters

111 RKC Management Committee

20 APEC Recommended Pathway to Accession 30 Tabular Summary of Applicability and Gap Analysis

31 Applicability Analysis 311 Applicability Defined 312 Non-applicable Provisions of the General Annex 313 Non-applicable Provisions of the Specific Annex

32 Gap Analysis 321 Components of Gap Analysis

33 Summary of Applicability and Gap Analysis ndash Including Recommendation on Accession Thereto

40 Proposed National Strategy for Compliance

41 Background 42 Stages of RKC Compliance 43 1ST Stage Activities 44 2nd Stage Activities 45 3rd Stage Activities 46 Endorsement to the President of the RKC National Strategy 47 Required Executive Actions

50 Investment Plan 51 Objective 52 Investment Components

Annexes

Annex A ndash Standards and Transitory Standards of the General Annex that Philippine National Legislations are compliant with Annex B ndash Standards and Transitory Standards of the General Annex that Philippine National Legislations are not compliant with Annex C ndash Standards and Recommended Practices of the Specific Annexes that Philippine National Legislations are compliant with Annex D ndash Standards and Recommended Practices of the Specific Annexes that Philippine National Legislations are not compliant with Annex E ndash Private Sector Group endorsement to President Gloria Macapagal Arroyo encouraging accession and compliance to the provisions of the RKC Annex F ndash Customs Report on the Benefits of Accession the Specific Annexes recommended for Acceptance and the Reservations to particular provisions Annex G ndash Department of Finance letter of endorsement of the Customs Report to the Department of Foreign Affairs with the Stakeholder Groups Endorsements Annex H ndash Department of Foreign Affairs Draft Instrument of Accession for the signature of the President Annex I ndash Draft Letter of the President to the Senate requesting advice and concurrence to accession to the Convention

PREFACE

In June 2006 the Partnership and Advocacy for Competitiveness and Trade (PACT) Project a project being implemented by the DLSU-Angelo King Institute for Economic and Business Studies in partnership with Philippine Exporters Confederation Inc (PHILEXPORT) and the Economic Modernization through Efficient Reforms and Governance Enhancement (EMERGE) engaged the Parayno Consultancy Services for the project ldquoResearch and Advocacy Support for Trade Facilitation Philippine Compliance with the Revised Kyoto Convention (ldquoRKCrdquo) hereinafter referred to as the ldquoProjectrdquo The Project was in response to the need to identify a clear path on how the Philippines should respond to the RKCrsquos imminent entry into force and to accelerate the pace and institutionalize the gains of trade facilitation and customs reforms and modernization and involves among others the conduct of a study on the current status of Philippine compliance with the RKC

The main deliverables of the Project are a draft National Strategy for RKC compliance as well as

a workplan for the implementation of the National Strategy The Project Team in coordination with the Philippine Bureau of Customs and concerned private

sector groups undertook a gap analysis to ascertain the measures needed to make Philippine national legislation compliant with the RKC

A pre-summit followed by a national summit was organized and held on 30 January 2007 and 5

February 2007 respectively to arrive at a National Strategy for RKC compliance The draft was presented and subsequently adopted and endorsed by concerned private sector groups Thereafter it was presented to President Gloria Macapagal-Arroyo through Secretary of Finance Margarito V Teves during the 105th Founding Anniversary celebration of the Philippine Customs Service on 6 February 2007

The Project Team wish to thank officials of the Bureau of Customs for their participation in the

gap analysis as well as the pre-summit and the summit We wish to express our gratitude especially to the following without whom the pre-summit and the summit would not have been successfully held

Bureau of Customs (BOC)

o Deputy Commissioner Reynaldo Nicolas o Collector John Simon o Members of the Bureau of Customs Kyoto Convention Management Team who acted as

Lead Shepherds o Officers of the Bureau of Customs who acted as lead facilitators in the pre-summit

Philippine Exporters Confederation Inc (PHILEXPORT) o Dr Ponciano Intal Jr o Gerardo Anigan o Jennifer Tan

AIM Policy Center o Dr Federico Macaranas o Rommella M Denopol

We would also like to express our gratitude to the Project Proponents and Funders for giving

Parayno Consultancy Services the opportunity for spearheading in this very important project that promises to upgrade significantly the global competitiveness of the country

Our deepest gratitude to retired Customs Collector Manual B Dionaldo who graciously welcomed

all refused telephone calls and personal visits to discuss highly technical and legal issues in the course of the gap analysis And who generously shared his knowledge and library of Customs laws rules and regulations

i

EXECUTIVE SUMMARY

Philippine Customs administrations past and present have implemented programs to simplify and harmonize Customs procedures even without having acceded to the World Customs Organizationrsquos (ldquoWCOrdquo) formerly the CCC International Convention on the Simplification and Harmonization of Customs Procedure (Kyoto Convention)

Several of the reform measures introduced from 1992 to 1998 by Philippine Customs in its

operation have in fact pre-dated some of the standards transitory standards and recommended practices agreed upon in 1999 by the WCO countries when they completed the review of the KC and opened for accession of the RKC

However several of these reform measures were not sustained partly because of the absence of

a holistic framework that can serve both a legally binding guidepost and framework for action to harmonizing Philippine Customs procedures with the rest of the world

Customs Administrations in Asian Pacific Economic Cooperation (APEC) and Association of

South East Asian Nations (ASEAN) have long recognized the importance of such a guidepost and framework and have committed as a group to reform and modernize their respective administrations along the standards and recommended practices of the RKC

A guidebook for APEC Economies to assist them to become Contracting Parties to the RKC

entitled The Revised Kyoto Convention a Pathway to Accession and Implementation was issued An important component of the guidebook is the examination of the gaps or differences between the countryrsquos national legislation and the RKC

The gap analysis conducted by the Project would show that the countryrsquos national legislation is

compliant to fifty five percent (55) of the standards transitory standards and recommended practices contained in the RKC ie we can find in our national legislation specific provisions expressly complying with the said standards transitory standards and recommended practices However a significant percentage all not reflected in the legislation Fortunately only sixteen percent (16) of the provisions contained in the RKC requires an amendment of our law Still other provisions of the RKC which may be important for facilitation of trade may however have an adverse impact on our countryrsquos other objectives such as the collection of revenues and the prevention of smuggling and other Customs violations

A national strategy for RKC compliance was therefore crafted that aims to immediately implement

most of the trade facilitation standards transitory standards and recommended practices of the RKC while giving time for the Customs administration to put in place measures that will not erode Customs capacity to effectively enforce their other control objectives

The national strategy proposed a schedule of acceptance and implementation of the RKC

provisions It proposed the immediate acceptance of the Body of the Convention the General Annex eight (8) Specific Annexes consisting of eighteen different chapters while making an express reservation on 27 recommended practices contained in these chapters of the eight Specific Annexes recommended for acceptance Furthermore it proposed that further studies be conducted on 7 Chapters contained in four (4) Specific Annexes A detailed discussion may be found in Annex ldquoGrdquo The national strategy also includes a package of investment measures and proposals which are needed not only to support the soonest accession of the Philippines to the RKC but also to insure quality compliance to most if not all of the modern systems and method of the convention

ii

PROPOSED NATIONAL STRATEGY FOR PHILIPPINE COMPLIANCE TO THE INTERNATIONAL CONVENTION FOR THE SIMPLIFICATION AND

HARMONIZATION 10 Introduction

11 The World Customs Organization (WCO) The Customs Cooperation Council (CCC) which is the forerunner of the WCO has since its

inception in 1952 been working to develop modern principles that would buttress effective customs administrations One of its major outputs is the 1973 Kyoto Convention (KC) which came into force in 1974 The WCO improved on the KC with the entry into force of the Revised Kyoto Convention (RKC) in 2006

12 Kyoto Convention (ldquoKCrdquo)

The early efforts of the CCC for simplifying and harmonizing customs procedures culminated

in the International Convention on the Simplification and Harmonization of Customs Procedures otherwise known as the Kyoto Convention (ldquoKCrdquo) or hereinafter referred to also as the ldquoConventionrdquo The KC was adopted by the Council in 1973 and enforced in 1974

13 Rationale for Revising the KC

Globalization rapid transformation of international trade patterns and advances in

information technology since then compelled the WCO and its members to review and update the KC

14 Revised Kyoto Convention (RKC)

The review and update of the KC resulted in the revision of the convention to reflect economic and technological changes that have occurred and incorporate best practices of the member customs administrations of the WCO The resultant revision is known as the Revised Kyoto Convention (ldquoRKCrdquo) RKC was adopted by 114 customs administrations attending the WCOs 94th Session in June 1999 It came into force on February 3 2006 three months after India became the 40th signatory to the Protocol of Amendment

The RKC contains necessary tools for facilitating trade that will ensure economic growth and

improve the security of the international trading system It seeks to answer the global call for professionalism and integrity in all customs administration The RKC serves as the blueprint for modern and efficient customs procedures in the 21st century The RKC is a key to anti-corruption initiative mdash by promoting the integrity and professionalism of customs administrations worldwide and reducing the susceptibility of businesses and citizens to corrupt customs practices

15 Philippines vis-agrave-vis the KC

The Philippines was not a contracting party to the KC However in the various reforms and modernization programs undertaken by the Philippine Bureau of Customs particularly during the 1992-98 Customs Reform and Modernization Program several national legislation were issued and systems and procedures developed that made many of its Customs operations compliant with the major provisions not just of the KC but also with the RKC which was then being deliberated about

16 Consequences of Philippine Non-accession of the KC

Although many of its Customs operations under the 1992-1998 Customs Reforms and

Modernization Program were compliant with the major provisions of the KC and also of the RKC it was a purely administrative initiative This administrative initiative was subsequently changed or ignored by succeeding Customs management Reforms were not sustained and worst in some fronts there were even reversals This could have been minimized if not all together prevented if the Philippines were a contracting party to the KC or has acceded to the KC

3

17 Compliance vs Accession Differences Being Kyoto Compliant means accepting the responsibility to construct regulatory policies and

practices in a manner that is consistent with the principles laid down in the Convention conforming to the standards set forth in the Convention Being compliant is something that can be done at any time by any country whether or not it accedes to the Convention It does not create rights and responsibilities relative to contracting parties

18 Accession Accession is a step beyond being compliant It is a legal act through which one recognizes

that one is or intends to be compliant that one accepts the obligations of the Convention as being legally binding It creates rights and responsibilities relative to other contracting parties

Accession would send a clear message that the public and private sector truly can work

together to facilitate trade and that trade and security are not mutually exclusive Accession presents a significant step forward in the promotion of economic growth national security and customs integrity at both the national and international level

Accession sends a clear message to both the international trade community and governments

around the world that the Philippines stands firmly behind customs procedures that facilitate the secure movement of legitimate trade across national borders

Accession will bring the following benefits

bull Protection against passage or issuance of National Legislation [revision of Customs Code Issuance of Presidential Decrees (PDs) and Executive Orderrsquos (EOrsquos) and Administrative Orders (AOs) Customs Administrative Orders (CAOs) and Customs Memorandum Orders (CMOs)] that are against the principles and provisions of the RKC Moves to legislate measures that are anti trade facilitation can out rightly be rejected if we are a signatory to the RKC

bull Provide a solid foundation for reforming and strengthening our Legislative Base which

is a very important first step in reforming Customs and related institutions Eliminating the gaps between RKC and National Legislation can be the Action Program of a Joint Business-Congressional-DOF-BOC Reform Agenda

bull Provide benchmark for assessing the status of the Philippinersquos Trade Efficiency and

Competitiveness

bull Provide a mechanism the RKC Management Committee to which foreign companies and countries can express their grievances against Customs administration which does not properly implement RKC

bull Provide the training ground and human resources such as the Lead Shepherds and

the members of the Team of Technical Experts involved in analyzing compliance of national legislation to the provisions of the RKC who can drive the reform process

19 Benefits Expected from Trading with Countries that are RKC Compliant

bull Reduce cost of clearing customs in other countries bull Minimize if not eliminate delays in getting the goods into the country

4

bull Individual companies do not have to learn 140 separate sets of customs procedures

bull Reduce if not eliminate inefficient customs procedures and policies that impede access to markets and unnecessarily increase costs

bull Facilitate product market introduction bull More efficient customs procedures overall bull Standardize customs implementation and administrative procedures worldwide -

across participating countries bull Reduce cycle time due to more predictability in the customs entry and release

process which will result in inventory savings (inventory costs can run as high as $20 million per day)

bull Promote greater understanding of compliance requirements resulting from increased transparency so that industry is better able to meet ldquotime-to-marketrdquo objectives

bull Promote the implementation of special procedures for low-risk importers bull Reduce opportunities for extortion of facilitationgrease payments thereby

paving the smooth transition to increased transparency and automation

110 RKC Structure

1101 General Annex

Chapter Title 1 General Principles (eg partnership with the trade) 2 Definitions 3 Clearance and other Customs Formalities (eg

standardized and simplified documents minimum requests pre-arrival declaration)

4 Duties and Taxes (eg deferred payment) 5 Security 6 Customs Control (eg risk management audit-based

controls specially simplified procedures for authorized traders co-operation with OGAs)

7 Application of Information Technology 8 Relationship between the Customs and Third Parties 9 Information Decisions and Rulings supplied by the

5

Customs (eg publication of information advance rulings) 10 Appeals in Customs Matters

1102 Specific Annexes and their Chapters

Specific Annex Chapter Title

A Arrival of Goods in a Customs Territory 1 Formalities Prior to the Lodgement of the

Goods Declaration 2 Temporary Storage of Goods

B Importation 1 Clearance for Home Use 2 Re-importation in the Same State 3 Relief from Import Duties and Taxes

C Exportation 1 Outright Exportation

D Customs Warehouses and Free Zones 1 Customs Warehouses 2 Free Zones

E Transit 1 Customs Transit 2 Transhipment 3 Carriage of Goods Coastwise

F Processing 1 Inward Processing 2 Outward Processing 3 Drawback 4 Processing of Goods for Home Use

G Temporary Admission 1 Temporary Admission

H Offences 1 Customs Offences J Special Procedures 1 Travellers 2 Postal Traffic 3 Means of Transport for Commercial use 4 Stores 5 Relief Consignments

K Origin 1 Rules of Origin 2 Documentary Evidence of Origin 3 Control of Documentary Evidence of Origin


The RKC provides for the creation of a RKC Management Committee composed of the

Contracting Parties as members The functions of the RKC Management Committee are to administer the RKC to recommend amendments to the RKC to make decision on amendments to Recommended Practices to make decisions with respect to a request of extension of the implementation period and to review and update the Guidelines The first meeting of the RKC Management Committee was held on 6-7 March 2006 20 APEC Recommended Pathway to Accession

When a new Contracting Party accedes to the RKC it must signify that it is accepting the

Body of the convention and the General Annex It need not accept any of the Specific Annexes However it may do so in whole or in part A country did not feel compelled to be compliant with the Specific Annex at the outset For as long as it is compliant with the Body of the Convention and the General Annex a country can begin to consider accession to the RKC When a country accepts a

6

chapter of a Specific Annex or a Specific Annex it is deemed to have accepted all the Standards contained therein It may only make reservations to the Recommended Practice contained in a chapter or Specific Annex accepted However any reservation to any Recommended Practices must be expressly made by the country in their Instrument of Accession

The guideline issued by APEC entitled The Revised Kyoto Convention A Pathway to

Accession and Implementation recommends as a first step to become RKC compliant undertaking a comparison of the provisions of the General Annex and subsequently of the provisions of the Specific Annexes with a countryrsquos existing national legislation (whether administered by Customs or by any other government agency which has an official regulatory responsibility relating to international trade in goods and the collection of duties and taxes) This will identify the provisions of the General Annex and the Specific Annexes with which a country is already in compliance with and those with which it will need to become compliant This process is referred to as a situational analysis

The next step is to undertake a gap analysis This analysis identifies the ldquogapsrdquo in national

legislation that need to be filled to enable accession to proceed and to ensure full compliance with the RKC It involves a close examination of each provision of the RKC with the objective of determining whether national legislation is already compliant If it is not compliant where is it inconsistent And finally what needs to be done in order to become compliant 30 Tabular Summary of Applicability and Gap Analysis

Not

Applicable Provisions

Compliant Provisions

Non-Compliant

Silent Provision

Total Number of Provisions

General Annex bull Chapter 3 3 28 14 45 bull Chapter 4 4 15 5 24 bull Chapter 5 - 5 2 7 bull Chapter 6 - 6 4 10 bull Chapter 7 - - 4 4 bull Chapter 8 - 3 4 7 bull Chapter 9 - - 9 9 bull Chapter 10 - 12 - 12

Specific Annex A bull Chapter 1 1 14 4 19 bull Chapter 2 - 9 4 13

Specific Annex B bull Chapter 1 - 1 1 2 bull Chapter 2 - - 15 15 bull Chapter 3 - 5 2 7

Specific Annex C bull Chapter 1 - 2 1 3

Specific Annex D bull Chapter 1 - 8 8 16 bull Chapter 2 - 16 5 21

Specific Annex E bull Chapter 1 - 17 9 26 bull Chapter 2 - 1 10 11 bull Chapter 3 1 2 14 17

Specific Annex F bull Chapter 1 - 14 12 26 bull Chapter 2 - - 18 18 bull Chapter 3 - 3 7 10 bull Chapter 4 - - 9 9

Specific Annex G

7

bull Chapter 1 - 9 14 23 Specific Annex H

bull Chapter 1 - 21 6 27 Specific Annex J

bull Chapter 1 2 26 11 39 bull Chapter 2 - 7 4 11 bull Chapter 3 - 11 4 15 bull Chapter 4 1 11 8 20 bull Chapter 5 - 3 3 6

Specific Annex K bull Chapter 1 - 13 - 13 bull Chapter 2 - 9 4 13 bull Chapter 3 - 12 1 13

31 Applicability Analysis

311 Applicability Defined

A Standard or a Recommended Practice is Applicable for purposes of the study when the subject matter covered is a principle a formality a control procedure or any other area of Customs operation which is either already covered by national legislation or must be covered by national legislation to better facilitate trade and improve customs compliance in the country It is Not Applicable when its non-coverage in the national legislation will not prejudice trade facilitation and Customs control nor contravene the principles and objectives of the RKC in the country

Non-applicable standards and recommended practices will also not be covered in the

National Strategy for Compliance to be developed in this Study Not being applicable these should pose no problem in the acceptance of the whole General Annex nor would it be relevant to accept the Specific Annex or the Chapters containing these

312 Non-Applicable Provisions of the General Annex

While the General Annex deals with the core principles for all Customs procedures and

practices to ensure that these are uniformly applied by Customs administrations the customs procedures specifically dealing on land border situations are not relevant to an archipelagic country such as the Philippines Thus the following standards of the General Annex are not applicable to the Philippine situation

3121 Chapter 3 Clearance and Other Customs Formalities mdash Competent Customs offices

bull Standard 33 Juxtaposed Customs offices Where Customs offices are located at a

common border crossing the Customs administrations concerned shall correlate the business hours and the competence of those offices

bull Transitional Standard 34 Cooperation at juxtaposed Customs offices At common

border crossings the Customs administrations concerned shall whenever possible operate joint controls

bull Transitional Standard 35 New Customs offices at common borders Where the

Customs intend to establish a new Customs office or to convert an existing one at a common border crossing they shall wherever possible co-operate with the neighboring Customs to establish a juxtaposed Customs office to facilitate joint controls

There are no expressed provisions in the Customs Code on payment due date However It may be inferred from the provisions on Abandonment as well as on the period of storage in and illegal withdrawals from customs warehouses that payment due dates are prior to Customs release Thus Standard 49 is not applicable as well

8

bull Chapter 4 Duties and Taxes A Assessment Collection and Payment of Duties and

Taxes Standard 49 When national legislation specifies that the due date may be after the release of the goods the date shall be at least ten days after the release No interest shall be charged for the period between the date of release and the due date

A form of deferred payment available to government imports is the Special Allotment Release Order or SARO but even this facility is strictly release upon posting of a guarantee by the government office concerned that they commit to work out with the Department of Budget and Management to obtain the SARO that would credit the collection of Customs For the importations of the private sector there is no release on deferred payment facility nor would it be conceivable for government to legislate such The following General Annex Standards on deferred payment of duties and taxes are not applicable

3122 Chapter 4 Duties and Taxes B Deferred Payment of Duties and Taxes

bull Standard 415 Where national legislation provides for the deferred payment of duties

and taxes it shall specify the conditions under which such facility is allowed bull Standard 416 Deferred payment shall be allowed without interest charges to the

extent possible

bull Standard 417 The period for deferred payment of duties and taxes shall be at least fourteen days

313 Non-Applicable Provisions of the Specific Annexes

3131 Specific Annex E Transit Chapter 3 Carriage of Goods Coastwise mdash Security

bull Standard 17

P Only when the Customs consider it indispensable shall security be required in respect of goods in free circulation being transported under the carriage of goods coastwise procedure which would be liable to export duties and taxes if exported or which are subject to export prohibitions or restrictions

N Customs has no jurisdiction over goods in free circulation It must first assume jurisdiction as in seizing it or holding it for some violation before it can require security

3132 Specific Annex J Special Procedures mdash Field of Application

The standard and recommended practice below of Annex J Chapter 1 on Travellers refers to departure and arrival at a land border and therefore not applicable to Philippine Customs

bull Standard 4 Subject to compliance with the appropriate Customs controls travelers

entering or leaving the country by their means of transport for private use shall be permitted to accomplish all necessary Customs formalities without as a matter of course having to leave the means of transport in which they are traveling

bull Recommended Practice 5 Travelers entering or leaving the country by road vehicle

for commercial use or train should be permitted to accomplish all necessary Customs formalities without as a matter of course having to leave the means of transport in which they are traveling

Likewise the below recommended practice on the treatment of stores for consumption on international express trains of Annex J Chapter 4 is not applicable

9

3133 Chapter 4 Stores Stores on board arriving vessels aircraft or trains mdash a Exemption from import duties and taxes

bull Recommended Practice 4 Stores for consumption by the passengers and the crew imported

as provisions on international express trains should be exempted from import duties and taxes provided that

1 Such goods are purchased only in the countries crossed by the international train

in question and 2 Any duties and taxes chargeable on such goods in the country where they were

purchased are paid

32 Gap Analysis

321 Components of Gap Analysis

The Gap Analysis identified the following

a Standards Transitory Standards and Recommended Practices that are compliant with National Legislation

b Provisions or specific National Legislation that support the Standards Transitory

Standards and Recommended Practices we are compliant with

c Standards Transitory Standards and Recommended Practices that are not compliant with National Legislation for the following reasons

1 It is not allowed under our current legislation 2 Our Code laws administrative orders andor circulars are inconsistent with

the standards transitory standards and recommended practices

3 It is allowed under certain conditions which are not those contemplated by the RKC

4 Our Code laws administrative orders andor circulars are silent with regard

to the said standards transitory standards andor recommended practice 5 Contrary to the present rules or procedure as designed under the Asycuda or

TWM Aside from identifying Standards Transitory Standards and Recommended Practices for which National Legislation is non-compliant part of the analysis was to identify the reason for the gap and to recommend measures needed to remove the gap

The result of the gap analysis and a discussion thereof are contained in the following annexes attached hereto

bull Annex A ndash Standards and Transitory Standards of the General Annex that Philippine

National Legislations are compliant with bull Annex B ndash Standards and Transitory Standards of the General Annex that Philippine

National Legislations are not compliant with

bull Annex C ndash Standards and Recommended Practices of the Specific Annexes that Philippine National Legislations are compliant with

bull Annex D ndash Standards and Recommended Practices of the Specific Annexes that

Philippine National Legislations are not compliant with

10

33 Summary of Applicability and Gap Analysis mdash Including Recommendation on

Accession Thereto

331 General Annex

3311 Chapter 3 Clearance and Other Customs Formalities

Out of forty five (45) standards and transitional standards contained in this chapter of the General Annex the following three (3) standards are not applicable to the Philippines

33 Where Customs offices are located at a common border crossing the Customs administrations concerned shall correlate the business hours and the competence of those offices

Standard

34 At common border crossing the Customs administrations shall whenever possible operate joint controls

Standard

35 Where the Customs intend to establish a new Customs office or to convert an existing one at a common border crossing they shall wherever possible co-operate with the neighbouring Customs to establish a juxtaposed Customs office to facilitate joint controls

Standard

Philippine national legislation is silent as to the following eight (8) standards and transitional

standards for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these standards and transitional standards for us to be compliant

39 Before lodging the Goods declaration the declarants shall be allowed under such conditions as may be laid down by the Customs

(a) to inspect the goods and (b) to draw samples

Standard

320 The Customs shall permit the lodging of the Goods declaration at any designated Customs office

Standard

325 National legislation shall make provision for the lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods

Standard

328 The Customs shall permit the declarant to amend the Goods declaration if a request is received after the checking the Goods declaration has commenced if the reasons given by the declarant are deemed valid by the Customs

Transitional

331 For the purpose of checking the Goods declaration the Customs shall take only such action as they deem essential to ensure compliance with Customs law

Standard

335 If the goods must be inspected by other competent authorities and the Customs also schedules an examination the Customs shall ensure that the inspections are co-ordinated and if possible carried out at the same time

Standard

336 The Customs shall consider requests by the declarant to be present or to be represented at the examination of the goods Such request shall be granted unless exceptional circumstances exist

Standard

337 If the Customs deem it useful they shall require the declarant to be present or to be represented at the examination of the goods to give them any assistance necessary to facilitate the

Standard

11

examination

Our national legislation is not compliant with the following six (6) standards and transitional standards of Chapter 3 ie these standards and transitional standards are not allowed under existing laws andor regulations

37 Any person having the right to dispose of the goods shall be

entitled to act as declarant Standard

319 The Customs shall not require a translation of the particulars

of supporting documents except when necessary to permit the processing of the Goods declaration

Standard

324 At the request of the declarant and for reasons deemed valid by the Customs the latter shall extend the time limit prescribed for lodging the Goods declaration

Standard

329 The declarant shall be allowed to withdraw the Goods declaration and apply for another Customs procedure provided that the request to do so is made to the Customs before the goods have been released and that the reasons are deemed valid by the Customs

Transitional

332 For authorized persons who meet criteria specified by the Customs including having an appropriate record of compliance with Customs requirements and a satisfactory system for managing their commercial records the Customs shall provide for bull release of the goods on the provision of the minimum

information necessary to identify the goods and permit the subsequent completion of the final Goods declaration

bull Clearance of the goods at the declarantrsquos premises or another place authorized by the Customs

And in addition to the extent possible other special procedures such as bull Allowing a single Goods declaration for all imports or

exports in a given period where goods are imported or exported frequently by the same person

bull Use of the authorized personsrsquo commercial records to self-assess their duty and tax liability and where appropriate to ensure compliance with other Customs requirements

bull Allowing the lodgment of the Goods declaration by means of an entry in the records of the authorized person to be supported subsequently by a supplementary Goods declaration

Transitional

341 If the Customs are satisfied that the declarant will subsequently accomplish all the formalities in respect of clearance they shall release the goods provided that the declarant produces a commercial or official document giving the main particulars of the consignment concerned and acceptable to the Customs and that security where required has been furnished to ensure collection of any applicable duties and taxes

Standard

12

3312 Chapter 4 Duties and Taxes

Out of twenty four (24) standards and transitional standards contained in this chapter of the General Annex the following four (4) standards are not applicable to the Philippines

49 When national legislation specifies that the due date may be after the release of the goods the date shall be at least ten days after the release No interest shall be charged for the period between the date of release and the due date

Standard

415 Where national legislation provides for the deferred payment of duties and taxes it shall specify the conditions under which such facility is allowed

Standard

416 Deferred payment shall be allowed without interest charges to the extent possible

Standard

417 The period for deferred payment of duties and taxes shall be at least 14 days

Standard

Philippine national legislation is silent as to the following three (3) standards and transitional


420 Where permission is given by the Customs for goods originally declared for a Customs procedure with payment of the duties and taxes to be placed under another Customs procedure repayment shall be made of any duties and taxes charged in excess of the amount due under the new procedures

Transitional

421 Decisions on claims for repayment shall be reached and notified in writing to the persons concerned without under delay and repayment of the amounts overcharged shall be made as soon as possible after the verification of claims

Standard

422 Where it is established by the Customs that the overcharge is a result of an error on the part of the Customs in assessing the duties and taxes repayment shall be made as a matter of priority

Standard

Our national legislation is not compliant with the following two (2) standards and transitional

standards of Chapter 4 ie these standards and transitional standards are not allowed under existing laws andor regulations

410 National legislation shall specify the period within which the Customs may take legal action to collect duties and taxes not paid by the due date

Standard

419 Repayment shall be granted in respect of imported or exported goods which are found to have been defective or otherwise not in accordance with the agreed specifications at the time of importation or exportation and are returned either to the supplier or to another person designated by the supplier subject to the following conditions bull The goods have not been worked repaired or used in

the country of importation and are re-exported within a reasonable time

bull The goods have not been worked repaired or used in the country to which they were exported and are re-imported within a reasonable time

Standard

13

Use of the goods shall however not hinder the repayment if such use was indispensable to discover the defects or other circumstances which caused the re-exportation or re-importation of the goods As an alternative to re-exportation or re-importation the goods may be abandoned to the Revenue or destroyed or rendered commercially valueless under Customs control as the Customs may decide Such abandonment or destruction shall not entail any cost to the Revenue

3313 Chapter 5 Securities

Philippine national legislation is silent as to the following standard for which guidelines in the

form of a Manual of Customs Operations need to be issued as a regulation expressly including these standards and transitional standards for us to be compliant

56 Where security is required the amount of security to be provided shall be as low as possible and in respect of the payment of duties and taxes shall not exceed the amount potentially chargeable

Standard

Our national legislation is not compliant with the following standard ie this standard is not

allowed under existing laws andor regulations

57 Where security has been furnished it shall be discharged as soon as possible after the Customs are satisfied that the obligations under which the security was required have been duly fulfilled

Standard

3314 Chapter 6 Customs Control

Out of ten (10) standards and transitional standards contained in this chapter of the General

Annex Philippine national legislation is silent as to the following standards for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these standards and transitional standards for us to be compliant

65 The Customs shall adopt a compliance measurement strategy to support risk management

Standard

67 The Customs shall seek to co-operate with other Customs administrations and seek to conclude mutual administrative assistance agreements to enhance Customs control

Standard

68 The Customs shall seek to co-operate with the trade and seek to conclude Memorandum of Understanding to enhance Customs control

Standard

610 The Customs shall evaluate tradersrsquo commercial systems where those systems have an impact on Customs operations to ensure compliance with Customs requirements

Standard

3315 Chapter 7 Application of Information Technology

Philippine national legislation is silent on all the following four (4) standards contained in this

Chapter and to become compliant to the said standards and transitional standards of this Chapter of the General Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly adopting the said standards

14

71 The Customs shall apply information technology to support Customs operations where it is cost-effective and efficient for the Customs and for the trade The Customs shall specify the conditions for its application

Standard

72 When introducing computer applications the Customs shall use relevant internationally accepted standards

Standard

73 The introduction of information technology shall be carried out in consultation with all relevant parties directly affected to the greatest extent possible

Standard

74 New or revised national legislation shall provide for bull Electronic commerce methods as an alternative to

paper-based documentary requirements bull Electronic as well as paper-based authentication

methods bull The right of the Customs to retain information for their

own use and as appropriate to exchange such information with other Customs administrations and all other legally approved parties by means of electronic commerce techniques

Standard

3316 Chapter 8 Relationship between the Customs and Third Parties

Philippine national legislation is silent on the following three (3) standards contained in this

Chapter and to become compliant to the said standards of this Chapter of the General Annex there is a need to issue guidelines in a Manual of Customs Operations (to be issued as a regulation) which should expressly adopt the said standards

83 The Customs transactions where the person concerned elects to do business on his own account shall not be treated less favourably or be subject to more stringent requirements than those Customs transactions which are handled for the person concerned by a third party

Standard

84 A person designated as third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs

Standard

85 The Customs shall provide for third parties to participate in their formal consultations with the trade

Standard

3317 Chapter 9 Information Decisions and Ruling Supplied by the

Customs

Philippine national legislation is silent on all the following nine (9) standards contained in this Chapter and to become compliant to the said standards and transitional standards of this Chapter of the General Annex there is a need to pass a law or issue regulations which should expressly adopt the said standards andor transitional standards

91 The Customs shall ensure that all relevant information of general application pertaining to Customs law is readily available to any interested person

Standard

92 When information that has been made available must be amended due to changes in Customs law administrative arrangements or requirements the Customs shall make the revised information readily available sufficiently in advance of the entry into force of the changes to enable interested persons to take account of them unless advance notice is

Standard

15

precluded 93 The Customs shall use information technology to enhance the

provisions of information Standard

94 At the request of the interested person the Customs shall

provide as quickly and as accurately as possible information relating to the specific matters raised by the interested person and pertaining to Customs law

Standard

95 The Customs shall supply not only information specifically requested but also any other pertinent information which they consider the interested person should be made aware

Standard

96 When the Customs supply information they shall ensure that they do not divulge details of a private or confidential nature affecting the Customs or third parties unless such disclosure is required or authorized by national legislation

Standard

97 When the Customs cannot supply information free of charge any charge shall be limited to the approximate cost of the services rendered

Standard

98 At the written request of the person concerned the Customs shall notify their decision in writing within a period specified in national legislation Where the decision is adverse to the person concerned the reasons shall be given and the right of appeal advised

Standard

99 The Customs shall issue binding rulings at the request of the interested person provided that the Customs have all the information they deem necessary

Standard

Aside from the standards and transitional standards mentioned above Philippine national legislation is compliant with the other standards and transitional standards contained in the General Annex of the Revised Kyoto Convention However despite said compliance there is a need to compile the same together with regulations to be issued to be compliant with the above mentioned standards andor transitional standards in a coherent manner ie through a single Manual of Customs Procedures and Operations to enhance compliance by properly informing and educating the stakeholders and the officers and members of the Customs on the proper treatment of various customs procedures and to ensure the uniform enforcement thereof

332 Specific Annexes

3321 Specific Annex A Arrival Of Goods In A Customs Territory

a Chapter 1 Formalities Prior to the Lodgement of the Goods Declaration

The following Recommended Practice contained in this chapter of Specific Annex A is not applicable to the Philippines

7 Where the Customs office at which the goods are to be

produced is not located at the place where the goods are introduced into the Customs territory a document should be required to be lodged with the Customs at that place only where the Customs consider it necessary for control purposes

Recommended Practice

Philippine national legislation is silent as to the following Recommended Practice of this

Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations

16

need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

2 Customs formalities prior to the lodgement of the Goods

declaration shall apply equally without regard to the country of origin of the goods or the country from which they arrived


There are existing laws in the Philippines which run counter to the following Recommended

Practices of this Chapter which will require an amendment of our laws 9 The Customs should limit their information requirements to

that available in carriersrsquo normal documentation and should base their requirements on those set out in the relevant international transport agreements


10 The Customs should normally accept the cargo declaration as the only required documentation for the production of the goods


12 Where the documents produced to the Customs are made out in a language which is not specified for this purpose or in a language which is not a language of the country into which the goods are introduced a translation of the particulars given in those documents should not be required as a matter of course


In view of the need to pass legislation to amend existing law in order for us to be compliant

with these Recommended Practices we recommend acceptance of this Chapter but make an express reservation on the above enumerated Recommended Practices

b Chapter 2 Temporary Storage of Goods

Philippine national legislation is silent as to the following Standards and Recommended

Practice of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

5 The Customs should accept the cargo declaration or

another commercial document as the only document to be required to place the goods under temporary storage provided that all the goods mentioned in that cargo declaration or that other commercial document are placed in temporary store


7 Goods under temporary storage shall be allowed for reasons deemed valid by the Customs to undergo normal operations necessary for their preservation in their unaltered state

Standard

8 Goods under temporary storage should be allowed for reasons deemed valid by Customs to undergo normal operations necessary to facilitate their removal from the temporary store and their further transport



Practice of this Chapter which will require an amendment of our laws 10 At the request of the person concerned and for reasons

deemed valid by the Customs the latter should extend the period initially fixed


17

In view of our non-compliance with the above Recommended Practice which will require an

amendment of our law we recommend that we accept this Chapter of Specific Annex A but express our reservation to this specific Recommended Practice

3322 Specific Annex B Importation

a Chapter 1 Clearance for Home Use

There are existing laws in the Philippines which run counter to the following Recommended Practice of this Chapter which will require an amendment of our laws

2 National legislation should provide that goods may be

declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for home use



amendment of our law we recommend that we accept this Chapter of Specific Annex B but express our reservation to this specific Recommended Practice

b Chapter 2 Re-Importation in the Same State Philippine national legislation is silent as to all of the Standards and Recommended Practice

of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these Standards and Recommended Practices for us to be compliant

1 Re-importation in the same state shall be governed by the

provisions of this Chapter and insofar as applicable by the provisions of the General Annex

Standard

2 Re-importation in the same state shall be allowed even if only a part of the exported goods is re-imported

Standard

3 When circumstances so justify re-importation in the same state shall be allowed even if the goods are re-imported by a person other than the person who exported them

Standard

4 Re-importation in the same state shall not be refused on the grounds that the goods have been used or damaged or have deteriorated during their stay abroad

Standard

5 Re-importation in the same state shall not be refused on the grounds that during their stay abroad the goods have undergone operations necessary for their preservation or maintenance provided however that their value at the time of exportation has not been enhanced by such operations

Standard

6 Re-importation in the same state shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure

Standard

7 Re-importation in the same state shall not be refused on the grounds that the goods were exported without notification of intended return

Standard

8 Where time limits are fixed beyond which re-importation in the same state will not be granted such limits shall be of sufficient duration to take account of the differing circumstances pertaining to each type of case

Standard

9 The Customs shall only require that goods re-imported in the same state be declared at the Customs office through

Standard

18

which they were exported where this will facilitate the re-importation procedure

10 No written Goods declaration shall be required for the re-importation in the same state of packings containers pallets and means of transport for commercial use which are in use for the international transport of goods subject to the satisfaction of the Customs that the packings containers pallets and means of transport for commercial use were in free circulation at the time of exportation

Standard

11 The Customs shall at the request of the declarant allow goods to be exported with notification of intended return and shall take any necessary steps to facilitate re-importation in the same state

Standard

12 The Customs shall specify the requirements relating to the identification of goods exported with notification of intended return In carrying this out due account shall be taken of the nature of the goods and the importance of the interests involved

Standard

13 Goods exported with notification of intended return should be granted conditional relief from any export duties and taxes applicable


14 At the request of the person concerned the Customs shall allow exportation with notification of intended return to be converted to outright exportation subject to compliance with the relevant conditions and formalities

Standard

15 Where the same goods are to be exported with notification of intended return and re-imported in the same state several times the Customs should at the request of the declarant allow the declaration for exportation with notification of intended return that is lodged on the first exportation to cover the subsequent re-importations and exportation to cover the subsequent re-importations and exportations of the goods during a specified period


c Chapter 3 Relief from Import Duties and Taxes


Practices of this Chapter which will require an amendment of our laws 6 Contracting Parties should consider granting relief from

import duties and taxes for goods specified in international instruments under the conditions laid down therein and also give careful consideration to the possibility of acceding to those international instruments

Recommended practice

7 Relief from import duties and taxes and from economic prohibitions and restrictions should be granted in respect of the following goods under the conditions specified and provided that any other requirements set out in the national legislation for such relief are complied with

(a) Therapeutic substances of human origin blood grouping and tissue typing reagents where they are consigned to institutions or laboratories approved by the competent authorities

(b) Samples of no commercial value which are regarded by the Customs to be of negligible value and which are to be used only soliciting orders for goods of the


19

kind they represent (c) Removable articles other than industrial commercial

or agricultural plant or equipment intended for the person and professional use of a person or members of his family which are brought into the country with that person or separately for the purpose of removal of his residence to the country

(d) Effects inherited by a person who at the time of the death of the deceased has his principal residence in the country of importation and provided that such personal effects were for personal use of the deceased

(e) Personal gifts excluding alcohol alcoholic beverages and tobacco goods not exceeding a total value to be specified in national legislation on the basis of retail value

(f) Goods such foodstuffs medicaments clothings and blankets sent as gifts to an approved charitable or philanthropic organization for distribution free of charge to needy persons by the organization or under its control

(g) Awards to persons resident in the country of importation subject to the production of any supporting documents required by the Customs

(h) Materials for the construction upkeep or ornamentation of military cemeteries coffins funerary urns and ornamental funerary articles imported by organization approved by competent authorities

(i) Documents forms publications reports and other articles of no commercial value specified in national legislation

(j) Religious objects used for worships and (k) Products imported for testing provided that the

quantities imported do not exceed those strictly necessary for testing and that the products are used up during testing or that remaining products are re-exported or rendered commercially valueless under Customs control

In view of our non-compliance with the above Recommended Practices which will require an

amendment of our law we recommend that we accept this Chapter of Specific Annex B but express our reservation to these specific Recommended Practices

3323 Specific Annex C Exportation

a Chapter 1 Outright Exportation

There are existing regulations in the Philippines which run counter to the following Recommended Practice which needs to be amended and can be amended without need for an amendment of an existing law In view thereof we can accept this Chapter without any reservation


declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for outright exportation


20

3324 Specific Annex D Customs Warehouses and Free Zones

a Chapter 1 Customs Warehouses

Philippine national legislation is silent as to the following Standard of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

10 Any person entitled to dispose of the warehoused goods

shall be allowed for reasons deemed valid by the Customs

(a) to inspect them (b) to take samples against payment of import duties and

taxes wherever applicable (c) to carry out operations necessary for their

preservation (d) to carry out such other normal handling operations as

are necessary to improve their packaging or marketable quality or to prepare them for shipment such as breaking bulk grouping of packages sorting and grading and repacking

Standard

There are existing laws in the Philippines which run counter to the following Standards and

Recommended Practices of this Chapter which will require an amendment of our laws 2 National legislation shall provide for Customs warehouses

open to any person having the right to dispose of the goods (public Customs warehouses)

Standard

5 Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of bull Public morality or order public security public

hygiene or health or for veterinary or phytosanitary considerations or

bull The protection of patents trade marks and copyrights

Irrespective of quantity country of origin from which arrived or country of destination Goods which constitute a hazard which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them


7 Admission to Customs warehouses shall be allowed for goods which are entitled to repayment of import duties and taxes when exported so that they may qualify for such repayment immediately on condition that they are to be subsequently exported


8 Admission to Customs warehouses with a view to subsequent exportation or other authorized disposal should be allowed for goods under the temporary admission procedure the obligations under that procedure thereby being suspended or discharged


9 Admission to Customs warehouses should be allowed for goods intended for exportation that are liable to or have


21

borne internal duties or taxes in order that they may qualify for exemption from or repayment of such internal duties and taxes on condition that they are to be subsequently exported

11 The Customs shall fix the authorized maximum duration of storage in a Customs warehouse with due regard to the needs of the trade and in the case of non-perishable goods it shall not be less than one year

Standard

12 The transfer of ownership of warehoused goods shall be allowed

Standard

Section 1901 to 1908 of the TCCP provide the legal basis for the warehousing of imported

goods to achieve the objectives of this Annex However the expanded use of the facility to goods of national origin as well as those dealt with under previous regimes are not supported by the provisions of the TCCP In view of our non-compliance with Standard 2 11 and 12 which will require an amendment of our law we recommend that we not accept this Chapter of Specific Annex D

b Chapter 2 Free Zones


Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

15 The transfer of ownership of goods admitted to a free zone

shall be allowed Standard

There are existing regulations in the Philippines which run counter to the following

Recommended Practices of this Chapter which needs to be amended and can be amended without need for an amendment of an existing law

18 Where a document must be produced to the Customs in

respect of goods which on removal from a free zone are sent directly abroad the Customs should not require more information than already available on the documents accompanying the goods


There are existing laws in the Philippines which runs counter to the following Standards and

Recommended Practice of this Chapter which will require an amendment of our laws 3 The Customs shall lay down the arrangements for Customs

control including appropriate requirements as regards the suitability construction and layout of free zones

Standard

4 The Customs shall have the right to carry out checks at any time of the goods stored in a free zone

Standard

9 No goods declaration should be required by the Customs in respect of goods introduced into a free zone directly from abroad if the information is already available on the documents accompanying the goods


Standards 3 and 4 run counter to the provisions of Republic Act No 7916 which expressly

provides that these facilities are outside customs control and jurisdiction are vested with the Philippine Export Processing Zone Authority In view of our non-compliance with Standard 3 and 4 which will require an amendment of our law we recommend that we not accept this Chapter of Specific Annex D

22

3325 Specific Annex E Transit

a Chapter 1 Customs Transit

There is no Philippine national legislation which would make us compliant with the Standards and Recommended Practices contained in this Chapter of Specific Annex E Therefore guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

1 Customs transit shall be governed by the provisions of this Chapter and insofar as applicable by the provisions of the General Annex

Standard

2 The Customs shall allow goods to be transported under Customs transit in their territory

(a) from an office of entry to an office of exit (b) from an office of entry to an inland Customs office (c) from an inland Customs office to an office of exit and (d) from one inland Customs office to another inland

Customs office

Standard

3 Goods being carried under Customs transit shall not be subject to the payment of duties and taxes provided the conditions laid down by the Customs are complied with and that any security required has been furnished

Standard

4 National legislation shall specify the persons who shall be responsible to the Customs for compliance with the obligations incurred under Customs transit in particular for ensuring that the goods are produced intact at the office of destination in accordance with the conditions imposed by the Customs

Standard

5 The Customs should approve persons as authorized consignors and authorized consignees when they are satisfied that the prescribed conditions laid down by the Customs are met


6 Any commercial or transport document setting out clearly the necessary particulars shall be accepted as the descriptive part of the Goods declaration for Customs transit and this acceptance shall be noted on the document

Standard

7 The Customs should accept as the Goods declaration for Customs transit any commercial or transport document for the consignment concerned which meets all the Customs requirements This acceptance should be noted on the document


8 The Customs at the office of departure shall take all necessary action to enable the office of destination to identify the consignment and to detect any unauthorized interference

Standard

9 Subject to the provisions of other international conventions the Customs should not generally require that transport-units be approved in advance for the transport of goods under Customs seal


10 When a consignment is conveyed in a transport-unit and Customs sealing is required the Customs seal shall be affixed to the transport-unit itself provided that the transport-unit is so constructed and equipped that

(a) Customs seals can be simply and effectively affixed to

Standard

23

it (b) No goods can be removed from or introduced into the

sealed part of the transport-unit without leaving visible traces of tampering or without breaking the Customs seal

(c) It contains no concealed spaces where goods may be hidden and

(d) All spaces capable of holding goods are readily accessible for Customs inspection

The Customs shall decide whether transport-units are secure for the purposes of Customs transit

11 Where the accompanying documents make it possible unequivocally to identify the goods the latter should generally be transported without a Customs seal or fastening However a Customs seal or fastening may be required bull Where the Customs office of departure considers it

necessary in the light of risk management bull Where the Customs transit operation will be facilitated

as a whole or bull Where an international agreement so provides


12 If a consignment is in principle to be conveyed under Customs seal and the transport-unit cannot be effectively sealed identification shall be assured and unauthorized interference rendered readily detectable by bull Full examination of the goods and recording the

results thereof on the transit document bull Affixing Customs seals or fastenings to individual

packages bull a precise description of the goods by reference to

samples plans sketches photographs or similar means to be attached to the transit document

bull stipulation of a strict routing and strict time limits or bull Customs escort

The decision to waive sealing of the transport-unit shall however be the prerogative of the Customs alone

Standard

13 When the Customs fix a time limit for Customs transit it shall be sufficient for the purposes of the transit operations

Standard

14 At the request of the person concerned and for reasons deemed valid by the Customs the latter should extend any period initially fixed

Standard

15 Only when they consider such a measure to be indispensable shall the Customs

(a) require goods to follow a prescribed itinerary or (b) require goods to be transported under Customs

escort

Standard

16 Customs seals and fastenings used in the application of Customs transit shall fulfill the minimum requirements laid down in the Appendix to this Chapter

Standard

17 Customs seals and identification marks affixed by foreign Customs should be accepted for the purposes of the Customs transit operation unless


24

bull they are considered not to be sufficient bull they are not secure or bull the Customs proceed to an examination of the goods

When foreign Customs seals and fastenings have been accepted in a Customs territory they should be afforded the same legal protection in that territory as national seals and fastenings

18 Where the Customs offices concerned check the Customs seals and fastenings or examine the goods they should record the results on the transit document


19 A change in the office of destination shall be accepted without prior notification except where the Customs have specified that prior approval is necessary

Standard

20 Transfer of the goods from one means of transport to another shall be allowed without Customs authorization provided that any Customs seals or fastenings are not broken or interfered with

Standard

21 The Customs should allow goods to be transported under Customs transit in a transport-unit carrying other goods at the same time provided that they are satisfied that the goods under Customs transit can be identified and the other Customs requirements will be met


22 The Customs should require the person concerned to report accidents or other unforeseen events directly affecting the Customs transit operation promptly to the nearest Customs office or other competent authorities


23 National legislation shall not in respect of the termination of a Customs transit operation require more than that the goods and the relevant Goods declaration be presented at the office of destination within any time limit fixed without the goods having undergone any change and without having been used and with Customs seals fastenings or identification marks intact

Standard

24 As soon as the goods are under its control the office of destination shall arrange without delay for the termination of the Customs transit operation after having satisfied itself that all conditions have been met

Standard

25 Failure to follow a prescribed itinerary or to comply with a prescribed time limit should not entail the collection of any duties and taxes potentially chargeable provided the Customs are satisfied that all other requirements have been met


26 Contracting Parties should give careful consideration to the possibility of acceding to international instruments relating to Customs transit When they are not in a position to accede to such international instruments they should when drawing up bilateral or multilateral agreements with a view to setting up an international Customs transit procedure take account therein of Standards and Recommended Practice in the present Chapter


b Chapter 2 Transhipment

Except for Recommended Practice 10 there is no Philippine national legislation which would

make us compliant with the Standards and Recommended Practices contained in this Chapter of

25

Specific Annex E Therefore guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these Standards and Recommended Practices for us to be compliant

1 Transshipment shall be governed by the provisions of this Chapter and insofar as applicable by the provisions of the General Annex

Standard

2 Goods admitted to transshipment shall not be subject to the payment of duties and taxes provided the conditions laid down by the Customs are complied with

Standard

3 Transshipment should not be refused solely on the grounds of the country of origin of the goods the country from which they arrived or their country of destination


4 Only one Goods declaration shall be required for the purposes of transshipment

Standard

5 Any commercial or transport document setting out clearly the necessary particulars shall be accepted as the descriptive part of the Goods declaration from transshipment and this acceptance shall be noted on the document

Standard

6 The Customs should accept as the Goods declaration for transshipment of any commercial or transport document for the consignment concerned which meets all the Customs requirements This acceptance should be noted on the document


7 When the Customs consider it necessary they shall take action at importation to ensure that the goods to be transshipped will be identifiable at exportation and that unauthorized interference will be readily detectable

Standard

8 When the Customs fix a time limit for the exportation of goods declared for transshipment it shall be sufficient for the purposes of transshipment

Standard



11 At the request of the person concerned and subject to such conditions as the Customs may specify the Customs should as far as possible allow goods in transshipment to undergo operations likely to facilitate their exportation


c Chapter 3 Drawback

The following Standard is not applicable to the Philippines

17 Only when the Customs consider it indispensable shall security be required in respect of goods in free circulation being transported under the carriage of goods coastwise procedure which would be liable to export duties and taxes if exported or which are subject to export prohibitions or restrictions

Standard


Practice of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these Standards and Recommended Practices for us to be compliant

26

2 The Customs shall allow goods to be transported under the carriage of goods coastwise procedure on board a vessel carrying other goods at the same time provided that they are satisfied that the goods can be identified and other requirements will be met

Standard

3 The Customs should require goods in free circulation being transported under the carriage of goods coastwise procedure to be segregated from other goods carried on board the vessel only when they consider it to be necessary for Customs control


7 National legislation shall specify the places which are approved for the loading and unloading of goods under the carriage of goods coastwise procedure and the times during which loading and unloading may be carried out

Standard

10 When a vessel transporting goods under the carriage of goods coastwise procedure is diverted during the voyage the Customs should at the request of the person concerned allow such goods to be unloaded under the procedure at a place other than that originally intended Any expenses chargeable shall be limited to the approximate cost of the services rendered


11 When the transport of goods under the carriage of goods coastwise procedure is interrupted by accident or force majeure the Customs shall require the master or other person concerned to take reasonable precautions to prevent the goods from entering into unauthorized circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstances which has interrupted the journey

Standard

12 When a vessel transporting goods under the carriage of goods coastwise procedure is conveying imported goods that have not been declared or goods placed under any other Customs procedure the Customs shall allow goods under the carriage of goods coastwise procedure to be loaded or unloaded as soon as possible after the arrival of the vessel at the place of loading or unloading

Standard

There are existing regulations in the Philippines which run counter to the following Standard

of this Chapter which needs to be amended and can be amended without need for an amendment of an existing law

13 The Customs shall require the master or other person

concerned to present only a single document giving details of the vessel listing the goods to be carried under the carriage of goods coastwise procedure and stating the port or ports in the Customs territory at which they are to be unloaded This document once endorsed by the Customs shall constitute the authorization for the conveyance of the goods under the carriage of goods coastwise procedure

Standard


Practice of this Chapter which will require an amendment of our laws 4 At the request of the person concerned and subject to such

conditions as the Customs deem necessary the latter should allow goods to be transported under the carriage of goods coastwise procedure on board a vessel which is to


27

call at a foreign port during its voyage coastwise 5 When a vessel which is to call at a place or places outside

the Customs territory has been authorized to convey goods under the carriage of goods coastwise procedure those goods should be sealed only at the request of the person concerned or when the Customs consider sealing to be necessary to ensure that goods cannot be removed therefrom or other goods added thereto without this being readily apparent


6 When a vessel transporting goods under the carriage of goods coastwise procedure is forced to deviate from its intended route and to call at a place outside the Customs territory the Customs should regard those goods as remaining under the carriage of goods coastwise procedure provided they are satisfied that the goods are those which were originally placed under the procedure


8 At the request of the person concerned the Customs should in the case of a vessel carrying only goods in free circulation under the carriage of goods coastwise procedure allow such goods to be loaded or unloaded at any place and at any time


9 At the request of the person concerned the Customs should allow goods under the carriage of goods coastwise procedure to be loaded or unloaded at a place other than that normally approved for that purpose even if the vessel is also carrying imported goods that have not been declared or goods placed under another Customs procedure Any expenses chargeable shall be limited to the approximate cost of the services rendered


15 When a general authorization has been granted for a vessel the Customs should require only a list of goods to be conveyed under the carriage of goods coastwise procedure before the goods are loaded


16 In relation to goods unloaded from a vessel covered by a specific authorization the Customs should require the master or other person concerned to present only a copy of the authorization listing the goods to be unloaded at the port In the case of a vessel granted a general authorization only a list of the goods to be unloaded should be required


In view of the need to amend some of our existing laws in order for us to be compliant to the above Recommended Practices we recommend that we express our reservation to the above

3326 Specific Annex F Processing

a Chapter 1 Inward Processing

Philippine national legislation is silent as to the following Standards and Recommended Practices of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including these Standards and Recommended Practices for us to be compliant

7 The possibility of determining the presence of imported

goods in the compensating products should not be imposed as a necessary condition of inward processing when

(a) the identify of the goods can be established


28

bull by submitting the details of the inputs and the process of manufacture of the compensating products or

bull during the processing operations by Customs control or

(b) the procedure is terminated by the exportation of

products obtained from the treatment of goods identical in description quality and technical characteristics to those admitted for inward processing

14 The requirements relating to the identification of goods for inward processing shall be laid down by the Customs In carrying this out due account shall be taken of the nature of the goods of the operations to be carried out and of the importance of the interests involved

Standard

17 Provision should be made for continuing inward processing in the event of transfer of ownership of the imported goods and the compensating products to a third person provided that that person assumes the obligations of the person granted the authorization


19 Provisions shall be made to permit compensating products to be exported through a Customs office other than that through which the goods placed under inward processing were imported

Standard

20 Provision shall be made to permit inward processing procedures to be terminated by exportation of the compensating products in one or more consignments

Standard



21 Upon request by the person concerned the competent

authorities shall authorize the re-exportation of the goods in the same state as imported with termination of inward processing

Standard

There are existing laws in the Philippines which run counter to the following Standard and

Recommended Practices of this Chapter which will require an amendment of our laws 3 Inward processing shall not be limited to goods imported

directly from abroad but shall also be granted for goods already placed under another Customs procedure

Standard

10 When an application for inward processing is made after the importation of the goods and meets the criteria for authorization the authorization should be granted retrospectively


16 At the request of the person concerned and for reasons deemed valid by the Customs the latter should extend the period initially fixed


22 Provision should be made for suspending or terminating inward processing by placing the imported goods or the compensating products under another Customs procedure subject to compliance with the conditions and formalities applicable in each case


29

25 The products obtained from the treatment of equivalent goods should be deemed to be compensating products for the purposes of this Chapter (setting-off with equivalent goods)


26 When setting-off with equivalent goods is allowed the Customs should permit the exportation of compensating products prior to the importation of goods for inward processing


Section 2001 to 2004 of the TCCP on Manufacturing Bonded Warehouse provide the legal basis for the conduct of mainstream inward processing in the country A person intending to regularly undertake inward processing may apply for a license for his manufacturingprocessing facility as a Customs Manufacturing Bonded Warehouse (CMBW) CAO 2-91 and CMO 31-91 were issued to implement these sections of the TCCP

However Section 2001 to 2004 and its implementing regulations cannot address many inward processing situations The regulations on the operations of Common Bonded Warehouses partially address the requirements of small companies Currently there are 10 common garments BW and 10 miscellaneous common BWs which have hundreds of members called subcontractors However a moratorium on the establishment of more common warehouses still in force hold after discovery of massive abuses of the facilities

Section 105-d of the TCCP has also been used as a basis for inward processing however

the regulations implementing the processing provision CAO 3-78 had been revoked after discovery of abuses

The breath of the inward processing as envisioned by this Specific Annex is not completely supported by current legislation Inward processing as envisioned by this Specific Annex does not require the intermediation of CMBWs (regular or common) nor is it a requirement that the importer and the processor be one and the same be one and the same person Also unsupported is the termination of the process with ldquoequivalent goodsrdquo rather than the goods imported

In view of the need to amend some of our existing laws in order for us to be compliant with

Standard 3 we recommend that we do not accept this Chapter of Specific Annex F

b Chapter 2 Outward Processing

There are existing laws in the Philippines which run counter to the following Standards and Recommended Practices of this Chapter which will require an amendment of our laws

1 Outward processing shall be governed by the provisions of

this Chapter and insofar as applicable by the provisions of the General Annex

Standard

2 Outward processing should not be refused solely on the grounds that the goods are to be manufactured processed or repaired in a given country


3 Temporary exportation of goods for outward processing shall not restricted to the owner of the goods

Standard

4 National legislation shall enumerate the cases in which prior authorization is required for outward processing and specify the authorities empowered to grant such authorization Such cases shall be as few as possible

Standard

5 Persons who carry out regular outward processing operations should on request be granted a general authorization covering such operations


6 The competent authorities should fix a rate of yield for an outward processing operation when they deem it necessary


30

or when it will facilitate the operation The description quality and quantity of the various compensating products shall be specified upon fixing that rate

7 The requirements relating to the identification of goods for outward processing shall be laid down by the Customs In carrying this out due account shall be taken of the nature of the goods of the operation to be carried out and the importance of the interests involved

Standard

8 The Customs shall fix the time limit for outward processing in each case

Standard



10 Provision shall be made to permit compensating products to be imported through a Customs office other than that through which the goods were temporarily exported for outward processing

Standard

11 Provision shall be made to permit compensating products to be imported in one or more consignments

Standard

12 Upon request by the person concerned the competent authorities shall allow goods temporarily exported for outward processing to be re-imported with exemption from import duties and taxes if they are returned in the same state This exemption shall not apply to import duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing

Standard

13 Unless national legislation requires the re-importation of goods temporarily exported for outward processing provision shall be made for terminating the outward processing by declaring the goods for outright exportation subject to compliance with the conditions and formalities applicable in such case

Standard

14 National legislation shall specify the extent of the exemption from import duties and taxes granted when compensating products are taken into home use and the methods of calculation of that exemption

Standard

15 The exemption from import duties and taxes provided for in respect of compensating products shall not apply to duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing

Standard

16 Where goods temporarily exported for outward processing have been repaired abroad free of charge provision should be made for them to be re-imported with total exemption from import duties and taxes under the conditions laid down in national legislation


17 The exemption from import duties and taxes should be granted if the compensating products were placed under another Customs procedure prior to being declared for home use


18 The exemption from import duties and taxes should be granted if the ownership of the compensating products is transferred before they are taken into home use


31

Compared to Inward Processing real Outward Processing is not at present a significant business activity in the country The only documented cases of outward processing pertains to articles that are easily identifiable and sent abroad for repairs like vessels and aircrafts and computers equipment machineries and parts However there is optimism that with China providing cheap labor and excess manufacturing capacity outward processing of raw materials will take-on and prosper in the future

The following subsection of Section 105 of the TCCP are the relevant provisions dealing with

outward processing (c) ldquocost of repairs excluding the value of the article used made in foreign countries upon

vessels and aircrafts documented registered or licensed in the Philippinesrdquo shall be qualified as conditionally free

(x) ldquoarticles of easy identification exported from the Philippines for repair and subsequently

re-importedrdquo shall be qualified as conditionally free imports There are no provisions dealing with goods (particularly raw materials) in free circulation sent abroad for manufacturing or processing for subsequent re-importation to the Philippines and

(t) deals with ldquoPhilippine articles previously exported and returnedrdquo which provides that the

article must not have been advanced in value or improved in condition by any process of manufacture or other meansrdquo

It may be said therefore that Philippine national legislation is not compliant with articles sent

abroad for repairs which is covered by Section 105(x) We recommend that the country not accept this Annex for the time being to facilitate the

countrys accession to the RKC and that a survey be undertaken to ascertain if there is significant outward processing business activity not covered by the existing legislation to justify amending the law Only then should the country again consider accepting this specific Annex




4 The Customs shall not withhold payment of drawback solely

because at the time of importation of the goods for home use the importer did not state his intention of claiming drawback at exportation Similarly exportation shall not be mandatory when such a statement has been made at importation

Standard

8 National legislation should provide for the use of electronic funds transfer for the payment of drawback



Practices of this Chapter which will require an amendment of our laws 3 National legislation should include provision for the

application of the drawback procedure in cases where the goods which have borne import duties and taxes have been replaced with equivalent goods used in the production of exported goods


5 Where a time-limit for the exportation of the goods is fixed beyond which they no longer qualify for drawback this


32

should upon request be extended if the reasons are deemed valid by the Customs

6 Where a time-limit is fixed beyond which claims for drawback will not be accepted provision should be made for its extension for commercial or other reasons deemed valid by the Customs


9 Drawback should also be paid on deposit of goods in a Customs warehouse or introduction of the goods into a free zone on condition that they are subsequently to be exported


10 The Customs should if so requested pay drawback periodically on goods exported during a specified period


In view of the need to amend certain existing laws for us to be compliant with the above

Recommended Practices we recommend the acceptance of this Chapter of Specific Annex F subject to making express reservations on the above

d Chapter 4 Processing of Goods for Home Use

Processing of goods for home use means the Customs procedure under which imported

goods may be manufactured processed or worked under Customs control before clearance for home use The procedure could lower the amount of the import duties and taxes payable since the product(s) of the operation may have a lower tariff rate value and quantity compared to those of the imported goods

The differences of this procedure with the private warehousing operations under Section 1901-08 of the TCCP are as follows

1 The duties and taxes payable under the processing for home use is computed based

on the value classification and quantity of the outputs not on the imported material or input as is the case under while under Sec 1901-08 of the TCCP

2 As contemplated the rate of duty on the output product(s) for most inward processing for home use operations would be lower than the applicable rates on the imported inputs (although it may the same or even ) The kinds of businesses that would avail of the procedure are those would not be normally be viable if managed under Sec 1901 For example it may be considered in the economic interest for more than 5 year old motor to be imported for purposes of recovering usable parts If duties and taxes were to be paid based on the 30 rate of duty of cars and their depreciated value the cost of the output products would be prohibitive But these cars are first broken down into their component into parts and then allowed to enter the customs territory as parts as would be the case under processing for home use then the operations may be prove viable

In theory the operations of free ports and freezones can support these operations If allowed by zone authorities payment of customs duties and taxes shall be based on the output goods and not on the imported inputs to the processing

To be compliant with the provisions of this Annex the procedure must be allowed in the customs territory as well Under the Code the only way goods may be brought in for manufacturing or processing or eventual home use is thru Section 1908 which runs counter to our existing law In view of the foregoing we recommend we not accept this Chapter at this time

3327 Specific Annex G Processing



Practice of this Chapter of the Specific Annex for which guidelines in the form of a Manual of

33

Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

5 Temporary admission should be granted without regard to

the country of origin of the goods the country from which they arrived or their country of destination

Standard

6 Temporarily admitted goods shall be allowed to undergo operations necessary for their preservation during their stay in the Customs territory

Standard

12 For the purpose of identifying goods temporarily admitted the Customs should take their own identification measures where commercial means of identification are not sufficient


15 When the goods granted temporary admission cannot be re-exported as a result of seizure other than a seizure made at the suit of private persons the requirement of re-exportation should be suspended for the duration of the seizure


16 On request the Customs should authorize the transfer of the benefit of the temporary admission to any other person provided that such other person

(a) satisfies the conditions laid down and (b) accepts the obligations of the first beneficiary of the

temporary admission


17 Provision shall be made to permit temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported

Standard

18 Provision shall be made to permit temporarily admitted goods to be re-exported in one or more consignments

Standard



11 Temporary admission of goods shall be subject to the

condition that the Customs are satisfied that they will be able to identify the goods when the temporary admission is terminated

Standard


Practices of this Chapter which will require an amendment of our laws 9 The Customs should grant temporary admission without

written Goods declaration when there is no doubt about the subsequent re-exportation of the goods


10 Contracting Parties should give careful consideration to the possibility of acceding to international instruments relating to temporary admission that will enable them to accept documents and guarantees issued by international organizations in lieu of national Customs documents and security




19 Provision should be made for suspending or terminating temporary admission by placing the imported goods under another Customs procedure subject to compliance with the


34

conditions and formalities applicable in each case 21 If security has been given in the form of a cash deposit

provision should be made for it to be repaid at the office of re-exportation even if the goods were not imported through that office


23 Goods which are not included in Recommended Practice 22 and goods in Recommended Practice 22 which do not meet all the conditions for total conditional relief should be granted temporary admission with at least partial conditional relief from import duties and taxes


In view of the need to amend some of our existing laws in order for us to be compliant

with the above Recommended Practices we recommend that we accept this Specific Annex subject to the reservations of the above enumerated Recommended Practices

3328 Specific Annex H Offences

a Chapter 1 Customs Offences



6 Personal searches for Customs purposes shall be carried

out only when there are reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious

Standard

10 The Customs should set out the particulars of Customs offences and the measures taken in offence reports or administrative records


19 The Customs shall take the necessary measures to ensure where applicable that as soon as possible after a Customs offence is discovered bull the administrative settlement of the latter is initiated

and bull the person concerned is informed about the terms and

conditions of the settlement the avenues of appeal and the time limits for such appeals

Standard


Recommended Practices of this Chapter which will require an amendment of our laws 15 The Customs should release from seizure or detention

means of transport that have been used in the commission of a Customs offence when they are satisfied that bull the means of transport have not be constructed

adapted or altered or fitted in any manner for the purpose of concealing goods and

bull the means of transport are not required to be produced as evidence at some later stage in the procedure and

bull where required adequate security can be given


21 Where a traveler is regarded as having committed a Customs offence of minor importance it should be possible


35

for the offence to be settled without delay by the Customs office which discovers it

25 Where Customs offence occurs as a result of force majeure or other circumstances beyond the control of the person concerned and there is no question of negligence or fraudulent intent on his part no penalty shall be applied provided that the facts are duly established to the satisfaction of the Customs

Standard


with Standard 25 we recommend that we do not accept this Specific Annex

3329 Specific Annex J Special Procedures

a Chapter 1 Travelers

Philippine national legislation is silent as to the following Standards and Recommended Practice of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practice for us to be compliant

2 The Customs facilities provided for in this Chapter shall

apply to travelers irrespective of their citizenshipnationality Standard

15 Wherever possible the use of credit cards or bank cards

should be acceptable as a means of payment for services rendered by the Customs and for duties and taxes


24 Fuel carried in the normal tanks of the means of transport for private use shall be admitted free of import duties and taxes

Standard

25 The facilities granted in respect of means of transport for private use shall apply whether the means of transport are owned rented or borrowed by non-residents and whether they arrive with before or after the traveler

Standard

31 The Customs shall allow non-residentsrsquo temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported

Standard

37 If security has been given in the form of a cash deposit provision should be made for it to be repaid at the office of re-exportation even if the goods were not imported through that office


39 Information concerning the Customs facilities applicable to travelers should be made available in the official language or languages of the country concerned and in any other language deemed to be useful



Practices of this Chapter which will require an amendment of our laws 9 Travelers should be permitted to make an oral declaration in

respect of the goods carried by them However the Customs may require a written or electronic declaration for goods carried by travelers which constitute an importation or exportation of a commercial nature or which exceed in value or quantity the limits laid down in national legislation


14 A system of flat-rate assessment should be applied to goods declared for home use under the facilities applicable to travelers provided that the importation is of a non-


36

commercial nature and that the aggregate value or quantity of the goods does not exceed the amounts laid down in national legislation

16 The quantities of tobacco goods wine spirits and perfume allowed to be imported free of import duties and taxes by travelers should be not less than

(a) 200 cigarettes or 50 cigars or 250 grams of tobacco or an assortment of these products of a total weight not exceeding 250 grams

(b) 2 litres of wine or 1 litre of spirits (c) frac14 litre of toilet water and 50 grams of perfume

The facilities provided for tobacco goods and alcoholic beverages may however be restricted to persons who have reached a certain age and may not be granted or may be granted in reduced quantities only to persons who cross the border frequently or who have been out of the country for less than 24 hours


17 In addition to the consumable products allowed to be imported free of import duties and taxes within specified quantitative limits travelers should be permitted to import free of import duties and taxes goods of a strictly non-commercial nature up to an aggregate value of 75 Special Drawing Rights (SDRs) A lower amount may be fixed for persons less than a certain age or for persons who cross the frontier frequently or who have been out of the country for less than 24 hours



Recommended Practices we recommend the acceptance of this Chapter of Specific Annex J subject to making express reservations on the above

b Chapter 2 Postal Traffic


Practice of this Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Standard and Recommended Practice for us to be compliant

4 The exportation of goods in postal items shall be allowed

regardless of whether they are in free circulation or are under a Customs procedure

Standard

5 The importation of goods in postal items shall be allowed irrespective of whether they are intended to be cleared for home use or for another Customs procedure


There are existing regulations in the Philippines which runs counter to the following Standard


10 Postal items shall not be subject to Customs formalities

whilst they are being conveyed in transit Standard


Practices of this Chapter which will require an amendment of our laws

37

9 When all the information required by the Customs is available from the CN22 or CN23 and supporting documents the form CN22 or CN23 shall be the Goods declaration except in the case of bull goods having a value exceeding an amount specified

in national legislation bull goods which are subject to prohibitions or restrictions

or to export duties and taxes bull goods the exportation of which must be certified bull imported goods intended to be placed under a

Customs procedure other than clearance for home use

In these cases a separate Goods declaration shall be required




c Chapter 3 Means of Transport for Commercial Use

Philippine national legislation is silent as to the following Standard and Recommended


3 Means of transport for commercial use whether loaded or

not should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes provided that such means of transport for commercial use are not used for internal transport in the Customs territory of the country of temporary admission They must be intended for re-exportation without having undergone any change except normal depreciation due to their use normal consumption of lubricants and fuel and necessary repairs


11 No documents to be produced to or lodged with the Customs in connection with the arrival of means of transport for commercial use arrive

Standard



10 The Customs shall reduce as far as possible the number of

copies of the declaration of arrival required to be submitted to them

Standard

There are existing laws in the Philippines which runs counter to the following Standard and

Recommended Practices of this Chapter which will require an amendment of our laws 13 Customs formalities applicable upon the departure of means

of transport for commercial use from the Customs territory shall be limited to measures to ensure that

Standard

38

(a) where required a declaration of departure is duly lodged with the competent Customs office

(b) where appropriate Customs seals are affixed (c) where required for control purposes specified

Customs routes are followed and (d) no unauthorized delay occurs in the departure of

means of transport for commercial use

In view of the need to amend certain existing laws for us to be compliant with the above Standard we recommend that we do not accept this Chapter at this time

d Chapter 4 Stores



2 Customs treatment of stores should apply equally

regardless of the country of registration or ownership of vessels aircraft or trains


6 When a declaration concerning stores on board vessels arriving in the Customs territory is required by the Customs the information required shall be kept to the minimum necessary for the purposes of Customs control

Standard

7 The quantities of stores which are allowed by the Customs to be issued from the stores held on board should be recorded on the declaration concerning stores produced to the Customs upon arrival of the vessel in the Customs territory and no separate form should be required to be lodged with the Customs in respect thereof


11 The Customs should allow the issue of stores for consumption on board by the crew while the vessel is undergoing repairs in a dock or shipyard provided that the stay in a dock or shipyard is considered to be of reasonable duration


12 When an aircraft is to land at one or more airports in the Customs territory the Customs should allow the issue of stores for consumption on board both during the stay of the aircraft at such intermediate airports and during its flight between such airports


13 The Customs shall require the carrier to take appropriate measures to prevent any unauthorized use of the stores including sealing of the stores when necessary

Standard

14 The Customs shall require the removal of stores from vessel aircraft or train for storage elsewhere during their stay in the Customs territory only when they consider it necessary

Standard

20 Stores on board vessels aircraft and trains having arrived in the Customs territory shall be allowed

(a) to be cleared for home use or to be placed under another Customs procedure subject to compliance with the conditions and formalities applicable in each case

(b) subject to prior authorization by the Customs to be transferred respectively to other vessels aircraft or

Standard

39

trains in international traffic We recommend we accept this Chapter of Specific Annex J without any reservation

e Chapter 5 Relief Consignments



2 Clearance of relief consignments for export transit

temporary admission and import shall be carried out as a matter of priority

Standard

3 In case of relief consignments the Customs shall provide for bull Lodging of a simplified Goods declaration or of a

provisional or incomplete Goods declaration subject to completion of the declaration within a specified period

bull Lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods and their release upon arrival

bull Clearance outside the designated hours of business or away from Customs offices and the waiver of any charges in this respect and

bull Examination andor sampling of goods only in exceptional circumstances

Standard

4 Clearance of relief consignments should be granted without regard to the country of origin the country from which arrived or country of destination

Recommended Standard

We recommend we accept this Chapter of Specific Annex J without any reservation

33210 Specific Annex K Origin

a Chapter 1 Rules of Origin

We should accept this Chapter of Specific Annex K since our national legislation is already

fully compliant with the Standards and Recommended Practices contained herein for the following reasons

bull The Philippines is a signatory to the Agreement Establishing the WTO which together with

the Supplemental Agreements have been ratified by the President and concurred to by the Senate One of these agreements which now forms part of the law of the land is the WTO Rules of Origin The two main principles governing the origin rules under the WTO are wholly produced or obtained goods and substantial transformation These are likewise the two main principles underlying the RKC origin rules

bull The country being a member of ASEAN is a signatory to both AFTA and the ASEAN-

China Free Trade Area (ACFTA) As such it is bound by the rules of origin under both agreements which among others provide alternative criteria on substantial transformation including Product Specific Rules The WTO allows certain ldquodeparturesrdquo from the general rules for economic and regional groupings such as the ASEAN

bull The Rules of Origin for the CEPT Scheme of AFTA together with the Operational

Certification Procedures already reflects all the standards and recommended practices under the RKC rules of origin This plus the fact that the RKC Rules of Origin are aligned

40

with the WTO rules are basis to conclude that Philippine national legislation on rules of origin are compliant with the RKC

b Chapter 2 Documentary Evidence of Origin

Philippine national legislation is silent as to the following Recommended Practices of this

Chapter of the Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Recommended Practices for us to be compliant

3 Documentary evidence of origin should not be required in the following cases

(a) goods sent in small consignments addressed to private individuals or carried in travellersrsquo baggage provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$ 10000

(b) commercial consignments the aggregate value of which does not exceed an amount which shall not be less than US$ 60

(c) goods granted temporary admission (d) goods carried in Customs transit (e) goods accompanied by a regional appellation

certificate as well as certain specific goods where the conditions to be met by the supplying countries under bilateral or multilateral agreements relating to those goods are such that documentary evidence need not be required

Where several consignments of the kind referred to in (a) or (b) are sent at the same time by the same means to the same consignee by the same consignor the aggregate value shall be taken to be the total value of those consignments


4 When rules relating to the requirement of documentary evidence of origin have been laid down unilaterally they should be reviewed at least every three years to ascertain whether they are still appropriate in the light of changes in the economic and commercial conditions under which they were imposed


8 Where the certificate of origin is made out in a language that is not a language of the country of importation the Customs of that country should not require as a matter of course a translation of the particulars given in the certificate of origin


12 Where documentary evidence of origin is required a declaration of origin should be accepted in the following cases bull goods sent in small consignments addressed to

private individuals or carried in travellersrsquo baggage provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$ 500

bull commercial consignments the aggregate value of which does not exceed an amount which shall not be less than US$ 300


41

Where several consignments of the kind referred to in (a) and (b) are sent at the same time by the same means to the same consignee by the same consignor the aggregate value shall be taken to be the total value of those consignments

We recommend we accept this Chapter of Specific Annex K without any reservation

c Chapter 3 Control of Documentary Evidence of Origin

Philippine national legislation is silent as to the following Standard of this Chapter of the

Specific Annex for which guidelines in the form of a Manual of Customs Operations need to be issued as a regulation expressly including this Standard for us to be compliant

2 The competent authority of the Contracting Party which has

received a request for control need not comply with it if the competent authority of the requesting Contracting Party would be unable to furnish that assistance if the positions were reversed

Standard



41 Background

The Partnership and Advocacy for Competitiveness and Trade (PACT) Projectlowast in coordination with the Export Development Council (EDC) commissioned the project ldquoResearch and Advocacy Support for Trade Facilitation Philippine Compliance with the Revised Kyoto Conventionrdquo

Compliance and accession to the RKC is an important component of the national strategy for

competitiveness presented to the President during the Competitiveness Summit The ASEAN member countries have also agreed to modernize their respective Customs Administrations along the standards and recommended practices of the RKC

The methodology utilized in the project is Gap Analysis The procedure identified the

Standards Transitory Standards and Recommended Practices of the RKC for which National Legislation is non-compliant Part of the analysis is the identification of the ldquocompliance gapsrdquo or the reasons for non-compliance as well as of measures to remove the gaps With the gaps and measures to remove the gaps as data a recommended pathway to compliance and accession was crafted and presented to the stakeholders and other concerned institutions as follows

bull The Applicability Analysis the Gap Analysis and the Draft National Strategy for

Compliance were posted in the Philippine website (wwwrkcphilnet) inviting stakeholders to comment thereon

bull A Pre-summit on the National Strategy for RKC Compliance when the Gaps and

measures to remove the Gaps was conducted The objective of the Pre-Summit was to make the participants (Customs business academe concerned government departments and other concerned groups) to agree to a 3-stage timetable for RKC Compliance

lowast A Project being implemented by the DLSU-Angelo King Institute for Economic and Business Studies in partnership with Philippine Exporters Confederation (PhilExport) under the Targeted Interventions in Economic Reform and Governance (TIERG)

42

bull A Summit on the National Strategy for Compliance and Pathway to Accession was held as part of the activities commemorating the 2007 founding anniversary celebration of the Bureau of Customs at the Summit the leaders of various business groups signed a joint letter to the President expressing support to the national strategy and indorsing the accession of the country to the RKC

42 Stages of RKC Compliance

While majority of the Standards Transitory Standards and Recommended Practices of the

RKC are already expressed in and are aligned with the laws orders rules and regulations of the country particularly in Customs a significant number are not and for several of these are even inconsistent with national legislation Some of the RKC provisions can easily be complied with by issuing new orders rules or regulations or modifying existing ones Others need development of enabling systems including ICT systems for its implementation Still others need amendment of existing laws and this may take time this year 2007 which is an election year

A strategy of compliance with three (3) stages will address the following objectives

bull Immediate implementation of majority of the provisions of the RKC bull Earliest possible announcement of Philippine accession to the RKC

bull Multi-sectoral advocacy for the RKC and private sector and donor agency support in

the development of the needed capabilities in Customs and the passage of required laws

bull Need for a continuing review of the countryrsquos compliance status and follow-up action

The three (3) stages for RKC Compliance and Accession that would respond to all of the

above objectives are the following

bull 1st Stage

Upon the Presidents signing of the Instrument of Accession to the RKC accepting the Body of the Convention the General Annex and those Specific Annexes that will not require amendment of Customs and related laws (save for a handful of important standards) execution of the activities listed in 30 below

bull 2nd Stage

Upon concurrence of 23 of all members of the Senate of the Instrument of Accession execution of the activities listed in 40 to more effectively implement the standards and recommended practices that are accepted under the instrument of accession

bull 3rd Stage

After depositing the Letter of Accession to the WCO execution of the activity listed in 50 Also part of this stage Specific Annexes standards and recommended practices that were recommended for issuance of reservation(s) shall be subject to periodic review by the Kyoto Convention Task Force consisting of members of the RKC Coalition which must be already organized for this purpose

43 1 Stage Activitiesst

431 General Announcement and Order

An Executive Order will be issued immediately mandating the following

43

bull Compliance by all concerned government agencies to all standards and recommended practice in the General Annex as well as the accepted standards and recommended practices in the specific annexes that are not against or inconsistent with current laws

bull The instruction shall include concerned agencies submitting a list of their existing

regulations inconsistent with these standards and recommended practice and their timetable for aligning their regulations accordingly

bull All standards and practices for which national legislation is silent (C-3) shall be

annexed in the Executive Order with instructions to the agencies concerned to issue implementing regulations to make clear observance of the provisions as part of national legislation

432 Issuance of a general amendatory IRR for those standards and accepted

practices not inconsistent with the Code but are inconsistent with national legislation (C-1) except where the inconsistency is in the Customs and other laws

The Summit output shall be an endorsement to the President thru the Secretary of Finance of

the National Strategy a copy of which is attached hereto as Annex E

44 2 Stage Activitiesnd

441 Preparation of a Manual of Customs Operations structured along the lines of the RKC particularly of the Specific Annexes

bull Instead of reviewing all customs memorandum orders and amending the same to be

able bring into force nationally all the basic rules from the General Annex as well as the accepted Standards and Recommended Practices of the Specific Annexes a more expedient approach is to develop a Manual of Customs Operations detailing the regulations systems and procedures for their implementation except those needing amendment of existing laws

bull The Manual must be structured along the lines of the RKC and must have a section

for each of the specific annexes of the Convention

bull The manual must incorporate in the systems and procedures the various RKC standards and practices accepted as provided in the National Strategy and the Instrument of Accession

bull Draft Manual initially containing the areas of operation covered by the RKC must be

presented to the experts group (customs and port users) to identify other common questions on Customs that must likewise be covered in the Customs Manual

442 Private Sector and Donor Agency Participation in the Manualization of

Customs Operations and Compliance

The Convention standards and practices to which the country has not complied with must be prioritized for assignment to private sector groups for the drafting of compliance of enabling systems and implementing regulations Donor agencies assistance may be sought for those needing the development of systems or expertise for the proper implementation For example should transitory standard 332 on authorized persons and special procedures be recommended and agreed upon for acceptance a volunteer private sector group must already develop the system and procedure for its implementation even ahead of RKC accession

45 3rd Stage Activities

bull Drafting of Amendatory Laws for those provisions of the RKC that are inconsistent with current laws (Strategy for Compliance S-1)

44

bull Continuing review of AnnexesChapters not accepted and reservations entered for

possible acceptance or withdrawal of reservations

46 Endorsement to the President of the RKC National Strategy

It is the aspiration that the Secretary of Finance the Commissioner of Customs and the various concerned groups will present to the President the National Strategy for RKC Compliance and Summit Outputs on or the occasion of the 105th Anniversary of the Bureau of Customs February 6 2007

47 Required Executive Actions

Should the RKC Summit favorably endorse this National Strategy for RKC the following documents will be prepared

1 Customs Report on the Benefits of Accession the Specific Annexes recommended for Acceptance and the Reservations to particular provisions a draft of which is attached hereto as Annex F

2 Department of Finance letter of indorsement of the Customs Report to the

Department of Foreign Affairs with the Stakeholder Groups Indorsements attached a draft of which is attached hereto as Annex G

3 Department of Foreign Affairs Draft Instrument of Accession for the signature of the

President a draft of which is attached hereto as Annex H

4 Draft Letter of the President to the Senate requesting advice and concurrence to accession to the Convention a copy of which is attached hereto as Annex I

5 Draft Senate resolution concurring to our accession to the Convention and

6 Draft Letter to the WCO transmitting the Instrument of Accession

50 Investment Plan

51 Objectives

1 Signing of the Instrument of Accession and Senate Resolution of Concurrence Approval on or before 31 December 2007

2 Maximum international dissemination of Philippine Accession thru Philippine offices of

foreign governments and businesses of the Instrument of Accession Senate Resolution and the Deposit of the Instrument of Accession The period covered will approximately be ten (10) months

3 Overall attainment of the objectives of the National Strategy within the Timeframes

Set

52 Investment Components

Advocacy Website

o Maintenance and Administration of wwwrkcphilnet including responding to the queries comments and inputs from the public This will run for three (3) years beginning March 1 2007 which is the approximate period within which the laws and other legislations will be made consistent with most if not all of the RKC standards and recommended practices Part of this will

Php 200000000

45

be periodic advertisement to visit the website o Pro-active dissemination of relevant information thru

conferences meetings and mail to target offices and groups

o Preparation of Presentation Materials and Printed Information Materials (updates and progress reports)

Codification and Manualization of Customs Operations Utilize RKC terminologies Organized along RKC structure Reflect the general principles standards and recommended

practices which are o among Specific Annexes and Chapters accepted as

well as standards and recommended practices not recommended for reservation andor

o not against nor inconsistent with current legislation RKC Compliance Center ndash A Memorandum of Agreement will

be entered into between the Center and the Bureau of Customs whereby the updating and maintenance of the Customs Operations will be vested upon the Center

Budget will be for three years operation of the Center

500000000

Enabling Systems Development of Identification of and development Trade and Transport Facilitation Group to set the level of

documentary inspections and physical examinations to comply with Standard 31 Chapter 3 of the General Annex o Risk Mgt Systems that would determine the ideal level

of selections o Development of business analytics doctrine methods

organization and training Transitory Standard 32 ndash Authorized Persons and Special

Procedures o Research and Study on how other countries implement o Develop Philippine procedure and enabling support

systems Standard 335

o Provide ICT system with database of interventions needed by HS Code and automated procedure for notifying agencies concerned of presence of shipments and goods declarations needing interventions

Others

500000000

Legislation Drafting and passage of needed laws Drafting of Model Customs Code Drafting of Implementing Orders Rules and Regulations

500000000

Program Implementation and Monitoring RKC Compliance Management Organization Organize a core group and provide training on the RKC the

National Strategy for Compliance and equip them with the means to assess progress of work and take measures to respond to deviations from set plans

Secretariat and PMIU mdash will be responsible for the day to day operations of the Center

Office-Center should be provided with adequate office facilities and equipment Consider obtaining office in Customs itself so Executive Director can work alongside with the Chairman KCMT in the execution of the National Plan

300000000

TOTAL Php 2000000000

46

Annex ldquoArdquo

General Annex Gap Analysis Compliant Provisions

bull General Annex Gap Analysis Compliant Provisions LEGEND o Chapter 3 Clearance and Other Customs Formalities

Competent Customs offices Standard 31 Standard 32

The declarant a Persons entitled to act as declarant

Standard 36 b Responsibility for particulars given

Standard 38 c Rights of the declarant

Standard 310 The Goods declaration

a Contents and format of the Goods declaration Standard 311 Standard 312 Standard 313 Standard 314 Standard 315

b Documents Supporting the Goods declaration Standard 316 Standard 317 Transitional Standard 318 Transitional Standard 321 Standard 322 Standard 323 Standard 326 Standard 327 Standard 330 Standard 331

Examination of the goods a Time required for examination of goods

Standard 333 Standard 334

c Sampling by the Customs Standard 338

Errors Standard 339

Release of goods Standard 340 Standard 342 Standard 343

Abandonment or destruction of goods Standard 344 Transitional Standard 345

o Chapter 4 Duties and Taxes A Assessment Collection and Payment of Duties and Taxes

Standard 41 Standard 42 Standard 43 Standard 44 Standard 45

47

Standard 46 Standard 47 Standard 48 Standard 411 Standard 412 Transitional Standard 413 Standard 414

B Deferred Payment of Duties and Taxes Standard 415 Standard 416 Standard 417

C Repayment of Duties and Taxes Standard 418 Standard 423 Standard 424

o Chapter 5 Security Standard 51 Standard 52 Standard 53 Standard 54 Standard 55

o Chapter 6 Customs Control Standard 61 Standard 62 Standard 63 Standard 64 Standard 66 Transitional Standard 69

o Chapter 8 Relationship between the Customs and Third Parties Standard 82 Standard 86 Standard 87


LEGEND P Provision of RKC G RKC Guidelines N Notes on Compliance

Chapter 3 Clearance and Other Customs Formalities

Competent Customs offices Standard 31 Establishment and designation of a Customs office

P The Customs shall designate the Customs offices at which goods may be produced or cleared In determining the competence and location of these offices and their hours of business the factors to be taken into account shall include in particular the requirements of the trade

N TCCP Sec 701 702 703

48

Standard 32 Hours of business and places of clearance

P At the request of the person concerned and for reasons deemed valid by the Customs the latter shall subject to the availability of resources perform the functions laid down for the purposes of a Customs procedure and practice outside the designated hours of business or away from Customs offices Any expenses chargeable by the Customs shall be limited to the approximate cost of the services rendered

N TCCP Sec 3506

The declarant a Persons entitled to act as declarant Standard 36

P National legislation shall specify the conditions under which a person is entitled to act as declarant

N TCCP 1301 as amended by RA 9280 b Responsibility for particulars given Standard 38

P The declarant shall be held responsible to the Customs for the accuracy of the particulars given in the Goods declaration and the payment of the duties and taxes

N Code clearly defines liability and penalty for wrongful declaration and the declaration is subscribed to

c Rights of the declarant Standard 310 Goods declaration for samples

P The Customs shall not require a separate Goods declaration in respect of samples allowed to be drawn under Customs supervision provided that such samples are included in the Goods declaration concerning the relevant consignment

N Silent but observed since obtaining of samples is after declaration

The Goods declaration a Contents and format of the Goods declaration Standard 311

P The contents of the Goods declaration shall be prescribed by the Customs The paper format of the Goods declaration shall conform to the UN-layout key For automated Customs clearance processes the format of the electronically lodged Goods declaration shall be based on international standards for electronic

49

information exchange as prescribed in the Customs Co-operation Council Recommendations on information technology

N Legislation provides use of UN Layout Key and ICT uses SAD

Standard 312 Minimum data requirements

P The Customs shall limit the data required in the Goods declaration to only such particulars as are deemed necessary for the assessment and collection of duties and taxes the compilation of statistics and the application of Customs law

N Legislation follows 56 field SAD but will be reduced to 48 ASEAN common data elements

Standard 313 Provisional or incomplete declaration

P Where for reasons deemed valid by the Customs the declarant does not have all the information required to make the Goods declaration a provisional or incomplete Goods declaration shall be allowed to be lodged provided that it contains the particulars deemed necessary by the Customs and that the declarant undertakes to complete it within a specified period

Standard 314 Tariff treatment of Incomplete Goods Declaration

P If the Customs register a provisional or incomplete Goods declaration the tariff treatment to be accorded to the goods shall not be different from that which would have been accorded had a complete and correct Goods declaration been lodged in the first instance The release of the goods shall not be delayed provided that any security required has been furnished to ensure collection of any applicable duties and taxes

N bull CMO 37-2001 - Revised Cargo Clearance Procedure to Implement RA 9135 and CAO 5-2001

bull CMO 3-2000 - Enhanced Cargo Clearance Procedures with provisions of Tentative Release

bull CMO 10-2000 - Detailed Procedures to Further Implement CMO 3-2000 bull CMO 4-1999 - Treatment of CashCheck Guarantee for Tentative Released

Shipments or Submission of Required Documents to Secure Payment of Duties Taxes and Other Charges

bull CMO 20-2004 - Consolidation and Revision of CMO 1-96 A B and C on the use of the Revised IEIRD (BC Form 236)

Standard 315 Copies of the Goods declaration

P The Customs shall require the lodgement of the original Goods declaration and only

50

the minimum number of copies necessary N Legislation spells out number of copies

b Documents Supporting the Goods declaration Standard 316 Supporting documents

P In support of the Goods declaration the Customs shall require only those documents necessary to permit control of the operation and to ensure that all requirements relating to the application of Customs law have been complied with

N The required supporting documents are specified in the legislation

Standard 317 Subsequent presentation of supporting documents

P Where certain supporting documents cannot be lodged with the Goods declaration for reasons deemed valid by the Customs they shall allow production of those documents within a specified period

N Code allows posting of bond for presentation of invoice and other supporting documents

Transitional Standard 318 Lodgement of supporting documents by electronic means

P The Customs shall permit the lodgement of supporting documents by electronic means

N E-commerce law allows this and ASYCUDA and TWM support submission of scanned documents

Transitional Standard 321 Electronic Goods declaration

P The Customs shall permit the lodging of the Goods declaration by electronic means N Mandatory under the Electronic Commerce Act

Standard 322

P The Goods declaration shall be lodged during the hours designated by the Customs N bull Civil Service Rules provides for the working hours of government offices as 800

AM to 5 PM bull Heads of offices are authorized to institute staggered office hours to provide

longer service to the public bull At present lodgment for most goods declaration is at entry encoding centers and

during office hours Only a handful of goods declarations are done electronically

51

and outside the regular office hours bull Upon implementation of the web based customs system lodgment will be 24x7

Standard 323

P Where national legislation lays down a time limit for lodging the Goods declaration the time allowed shall be sufficient to enable the declarant to complete the Goods declaration and to obtain the supporting documents required

N Section 1801 of the TCCP provides a time limit of 30 days from the date of discharge of the last package from the vessel or aircraft This is more than sufficient time

Standard 326

P When the Customs cannot register the Goods declaration they shall state the reasons to the declarant

N The current as well as the incoming ICT System satisfies this standard Should there be lacking information the system cannot proceed to register the declaration and error notification is provided

Standard 327 Amendment of a Goods declaration

P The Customs shall permit the declarant to amend the Goods declaration that has already been lodged provided that when the request is received they have not begun to check the Goods declaration or to examine the goods

N Current legislation allows this The ICT system however entails cancellation by the assigned Customs officer of the original declaration and the lodgement of a new one

Standard 330 Time of checking the Goods declaration

P Checking the Goods declaration shall be effected at the same time or as soon as possible after the Goods declaration is registered

N Since there is in operation an automated system the electronic declaration is immediately checked For greenlane shipments checking is completed 100 However there is the intervention of Commodity Specialist Checks on greenlane entries after payment long after registration prior to delivery of the goods which contravenes this standard

Standard 331 Checking the Goods declaration

P For the purpose of checking the Goods declaration the Customs shall take only such action as they deem essential to ensure compliance with Customs law

52

Examination of the goods a Time required for examination of goods Standard 333

P When the Customs decide that goods declared shall be examined this examination shall take place as soon as possible after the Goods declaration has been registered

Standard 334 Examination of live animals perishable goods and other urgent consignments

P When scheduling examinations priority shall be given to the examination of live animals and perishable goods and to other goods which the Customs accept are urgently required


P Samples shall be taken only where deemed necessary by the Customs to establish the tariff description andor value of goods declared or to ensure the application of other provisions of national legislation Samples drawn shall be as small as possible

C There is CMO 7-1990 - Guidelines for Taking Sample and other instructions on this but needs reiteration in the proposed examination manual

Errors Standard 339

P The Customs shall not impose substantial penalties for errors where they are satisfied that such error is inadvertent and that there has been no fraudulent intent or gross negligence Where they consider it necessary to discourage a repetition of such errors a penalty may be imposed but shall be no greater than is necessary for this purpose

N Section 2503 of the TCCP recognizes levels of undervaluation misclassification and misdeclaration that are mere errors or not constituting fraud and provides for a range of surcharge However there is no guideline on how the exact point in the range of surcharge (1x-2x additional duty payable) will have to be set CAO 10-93 Part III and CMO 64-93 list the situation when surcharge may not be imposed Strategy while it may be said that GRP is compliant on this standard there is still a need to issue legislation to improve the quality of compliance The regulation should include treatment of the specific errors listed in the Guidelines to the standard as follows Inadvertent errors in the declared value of goods can occur as

53

bull errors in transcription bull arithmetical mistakes in declarations or supporting documents bull inadvertent omissions of elements of the dutiable value such as inland freight

abroad bull inadvertent errors in the conversion of foreign currency or bull incorrect deductions such as discounts the inadmissibility of which is not

within the knowledge of the importer and similar errors arising from misunderstanding of the principles laid down in the legal provisions relating to valuation for Customs purposes

Release of goods Standard 340 Release of the goods as soon as possible

P Goods declared shall be released as soon as the Customs have examined them or decided not to examine them provided that bull no offence has been found bull the import or export license or any other documents required have been

acquired bull all permits relating to the procedure concerned have been acquired and bull any duties and taxes have been paid or that appropriate action has been

taken to ensure their collection N Both current and incoming ICT provide for the automated release of the goods upon

meeting the above conditions Standard 342 Release of the goods before the results of an examination

P When the Customs decide that they require laboratory analysis of samples detailed technical documents or expert advice they shall release the goods before the results of such examination are known provided that any security required has been furnished and provided they are satisfied that the goods are not subject to prohibitions or restrictions

N Maybe availed of pursuant to Sec 1602 on tentative liquidation Nonetheless clearer regulations must be issued to fully achieve the benefit of this RKC standard

Standard 343 Release of goods when an offence has occurred

P When an offence has been detected the Customs shall not wait for the completion of administrative or legal action before they release the goods provided that the goods are not liable to confiscation or forfeiture or to be needed as evidence at some later stage and that the declarant pays the duties and taxes and furnishes security to ensure collection of any additional duties and taxes and of any penalties which may be imposed

N There is release under bond redemption and other legal remedies

54

Abandonment or destruction of goods Standard 344 Repayment or remission of duties and taxes

P When goods have not yet been released for home use or when they have been placed under another Customs procedure and provided that no offence has been detected the person concerned shall not be required to pay the duties and taxes or shall be entitled to repayment thereof bull When at his request such goods are abandoned to the Revenue or

destroyed or rendered commercially valueless under Customs control as the Customs may decide

bull Any costs involved shall be borne by the person concerned bull When such goods are destroyed or irrecoverably lost by accident or force

majeure provided that such destruction or loss is duly established to the satisfaction of the Customs

bull On shortages due to the nature of the goods when such shortages are duly established to the satisfaction of the Customs

bull Any waste or scrap remaining after destruction shall be liable if taken into home use or exported to the duties and taxes that would be applicable to such waste or scrap imported or exported in that state

Transitional Standard 345 Proceeds of sale by Customs

P When the Customs sell goods which have not been declared within the time allowed or could not be released although no offence has been discovered the proceeds of the sale after deduction of any duties and taxes and all other charges and expenses incurred shall be made over to those persons entitled to receive them or when this is not possible held at their disposal for a specified period

N Sec 2605 of TCCP on Disposition of Proceeds

Chapter 4 Duties and Taxes A Assessment Collection and Payment of Duties and Taxes Standard 41

P National legislation shall define the circumstances when liability to duties and taxes is incurred

N Section 100 1901-1907 2001-04 of the TCCP Section 107 of the NIRC RA 7227 RA 7916 Check out Tariff Book

Standard 42

P The time period within which the applicable duties and taxes are assessed shall be stipulated in national legislation The assessment shall follow as soon as possible after the Goods declaration is lodged or the liability is otherwise incurred

55

N IT system undertakes assessment right after filing and registration of entry The assessment is immediately communicated to the bank

Standard 43

P The factors on which the assessment of duties and taxes is based and the conditions under which they are determined shall be specified in national legislation

N The Tariff Book clearly spells these out Standard 44

P The rates of duties and taxes shall be set out in official publications N All legislation requires publication to have force and effect

Standard 45

P National legislation shall specify the point in time to be taken into consideration for the purpose of determining the rates of duties and taxes

N Date of registration of entry is determinant However if rate changes after registration and before release the revised rate governs

Standard 46 Payment

P National legislation shall specify the methods that may be used to pay the duties and taxes

N CAO on Payments clearly define method of payments New payment system with BAP likewise

Standard 47

P National legislation shall specify the person(s) responsible for the payment of duties and taxes

N Section 1204 of the TCCP makes it the liability of importer Standard 48

P National legislation shall determine the due date and the place where payment is to be made

N CAO requires payments should be made to the banks and currently before lodgement with Customs

Standard 411

P National legislation shall determine the rate of interest chargeable on amounts of duties and taxes that have not been paid by the due date and the conditions of application of such interest

56

Standard 412

P When the duties and taxes have been paid a receipt constituting proof of payment shall be issued to the payer unless there is other evidence constituting proof of payment

N Banks issue Official Receipt Transitional Standard 413

P National legislation shall specify a minimum value andor a minimum amount of duties and taxes below which no duties and taxes will be collected

N Section 709 and 1604 of the TCCP Standard 414

P If the Customs find that errors in the Goods declaration or in the assessment of the duties and taxes will cause or have caused the collection or recovery of an amount of duties and taxes less than that legally chargeable they shall correct the errors and collect the amount underpaid However if the amount involved is less than the minimum amount specified in national legislation the Customs shall not collect or recover that amount

N Section 604 and 1707of the TCCP or collection shall be made B Deferred Payment of Duties and Taxes Standard 415

P Where national legislation provides for the deferred payment of duties and taxes it shall specify the conditions under which such facility is allowed

N No deferred payment in National legislation Standard 416

P Deferred payment shall be allowed without interest charges to the extent possible Standard 417

P The period for deferred payment of duties and taxes shall be at least fourteen days N A form of deferred payment available to government imports is the Special Allotment

Release Order or SARO but even this facility is strictly release upon posting of a guarantee by the government office concerned that they commit to work out with the Department of Budget and Management to obtain the SARO that would credit the collection of Customs For the importations of the private sector there is no release on deferred payment facility nor would it be conceivable for government to legislate such

57

C Repayment of Duties and Taxes Standard 418

P Repayment shall be granted where it is established that duties and taxes have been overcharged as a result of an error in their assessment

N Section 1707 of the TCCP Standard 423

P Where time limits are fixed beyond which claims for repayment will not be accepted such limits shall be of sufficient duration to take account of the differing circumstances pertaining to each type of case in which repayment may be granted

N Section 1707 of the TCCP ldquoif discovered within one year after the final liquidationrdquo

Standard 424

P Repayment shall not be granted if the amount involved is less than the minimum amount specified in national legislation

N Sec 1604 of the TCCP provides that in case of overpayment or underpayment where the amount involved is less than P10 no refund

Chapter 5 Security

Standard 51

P National legislation shall enumerate the cases in which security is required and shall specify the forms in which security is to be provided

N The Customs Code itself enumerates the cases (warehousing tentative liquidation conditionally free imports release pending seizure proceedings and others) when security is required the form(s) of security acceptable

Standard 52

P The Customs shall determine the amount of security G Customs must set out clear instructions on how the amount of security is to be

calculated In cases where national legislation specifies that the security is compulsory the Customs can fix the amount at a level equal to bull the precise amount of the duties and taxes due to Customs where it can be

established with certainty at the time the security is required bull any other amount specified in national legislation or bull the maximum amount as estimated by Customs of the obligations which

have been or may be incurred N Legislation already clearly defines how the amount of the security must be defined

58

Standard 53

P Any person required to provide security shall be allowed to choose any form of security provided that it is acceptable to the Customs

N In warehousing persons are given a choice between domestic letter of credit bank guarantee or bond albeit in actual practice persons always select the cheapest which is the warehousing bond In tentative liquidation pending value dispute settlement (CMO 37-2001) the policy is to limit the choices to cash managers check and bank guaranty with the acceptance of surety bond and other forms of security left to the determination of the Collector In several subparagraphs of Section 105 letter guarantee is an additional choice to a surety bond but as with the other situations requiring security the decision is made by customs although persons may request for the form In other situations only one form of security is provided Thus where national legislation provides for several forms of security persons are free to make a choice but final decision remains with Customs

Standard 54

P Where national legislation provides the Customs shall not require security when they are satisfied that an obligation to the Customs will be fulfilled

N Legislation provides flexibility to Customs to accept letter guarantee in-lieu of bonds for cases where it is not practical and proper to require a commercial security like for an aircraft that will be demonstrated in the country and the importer is a foreign government

Standard 55

P When security is required to ensure that the obligations arising from a Customs procedure will be fulfilled the Customs shall accept a general security in particular from declarants who regularly declare goods at different offices in the Customs territory

N bull Warehousing Bonds are Chargeable Bonds bull Transshipment Bonds are General Bonds not Transactions

Chapter 6 Customs Control

Standard 61

P All goods including means of transport which enter or leave the Customs territory regardless of whether they are liable to duties and taxes shall be subject to Customs control

N TCCP provides that entry and exist of goods and people into and out of the Customs territory is subject to Customs control

Standard 62

P Customs control shall be limited to that necessary to ensure compliance with the Customs law

N TCCP allows selective examination multi-channel processing etc

59

Standard 63

P In the application of Customs control the Customs shall use risk management N Revised Code on selective exam Selectivity allowed However there should be a

top commission to set risk management doctrine and levels of examination Standard 64

P The Customs shall use risk analysis to determine which persons and which goods including means of transport should be examined and the extent of the examination

N same Standard 66

P Customs control systems shall include audit-based controls N There are regulations issued but not implemented and consequently results not

feeding into risk management and selectivity system Transitional Standard 69

P The Customs shall use information technology and electronic commerce to the greatest possible extent to enhance Customs control

N E-Commerce Act

Chapter 8 Relationship between the Customs and Third Parties

G National Legislation is compliant to all these standards which covers the dealings of Customs with duly accredited Third Parties The issue that needs resolution is Who can act as Third Parties or Standard 37 since national legislation effectively curtailed the rights of persons to be declarant and deal directly with Customs

Standard 82

P National legislation shall set out the conditions under which a person may act for and on behalf of another person in dealing with the Customs and shall lay down the liability of third parties to the Customs for duties and taxes and for any irregularities

N The first CAO issued implementing RA 9280 recognized only one third party the Customs broker An amendatory CAO was shortly issued allowing forwarders and brokerage companies to undertake brokering for as long as the signing of the documents is left to a duly accredited professional customs broker bull The act and the implementing regulations clearly define the accreditation

procedure for the practice the Customs brokerage profession (or to be a customs broker) Section 1301 of the TCCP also provides ldquothat were the entry be filed by a party other than the importer said importer shall himself be required to declare under oath and under the penalties of falsification or perjury that the declarations and statements contained in the entry are true and correctrdquo

bull Penalties or sanctions on customs brokers for violations of laws rules and regulations are clearly defined Thus Phil national legislation maybe

60

considered as compliant on this standard Standard 86

P The Customs shall specify the circumstances under which they are not prepared to transact business with a third party

N No 1 of Part V of CAO3-2006A deals with the grounds for the suspension or revocation of accreditation

Standard 87

P The Customs shall give written notification to the third party of a decision not totransact business

N No 13 of Part V of CAO provides for Order of Suspension or Revocation of Accreditation

61

Annex B

General Annex Gap Analysis Non-Compliant Provisions

bull General Annex Gap Analysis Non-Compliant Provisions LEGEND o Chapter 3 Clearance and Other Customs Formalities




b Documents supporting the Goods declaration Standard 319 Standard 320 Standard 324 Standard 325 Transitional Standard 328 Transitional Standard 329 Standard 331

Special procedures for authorized persons Transitional Standard 332 Special Procedure 1 Special Procedure 2 Special Procedure 3 Special Procedure 4 Special Procedure 5


Standard 335 b Presence of the declarant at examination of goods


Release of goods Standard 341


Standard 410 C Repayment of Duties and Taxes

Standard 419 Transitional Standard 420 Standard 421 Standard 422

o Chapter 5 Security Standard 56 Standard 57

o Chapter 6 Customs Control Standard 65 Standard 67 Standard 68 Standard 610

o Chapter 7 Application of Information Technology Standard 71 Standard 72 Standard 73 Standard 74

62

o Chapter 8 Relationship between the Customs and Third Parties Standard 81 Standard 83 Standard 84 Standard 85

o Chapter 9 Information Decisions and Rulings Supplied by the Customs A Information of General Application

Standard 91 Standard 92 Transitional Standard 93

Effecting Amendment to the Import SAD in the ICT Present vs New Systems


LEGEND P Provision of RKC G RKC Guidelines N Notes on Compliance C 1

1a 1b 2 3 4 5

Compliance Gap Not allowed under current legislation Code and Laws are inconsistent Orders and Circulars are inconsistent Allowed under certain conditions not those contemplated under RKC Legislation is Silent Manageable under Asycuda or TWM Not manageable under Asycuda or TWM

S 1 2 3 4

Strategies for Compliance Amendment Law or Pass New Law Issue Department Order or a CAO to amend existing ones Develop implementing System andor reflect in the manual of operations which must be issued as a regulation Particularly highlight in the proposed executive order on the general announcement of RKC accession to clearly demonstrate compliance



bull Who can be a declarant

P Any person having the right to dispose of the goods shall be entitled to act as declarant

N While Sec 1301 did not put a limit to the right of ldquopersons having the right to dispose of the goodsrdquo to be the declarant nor was this recognition amended under RA 9280 the Board of Customs Brokers issued Resolution No 03 Series 2005 (Rules and Regulations Implementing the Provisions of RA 9280) where Section 27 thereof provides ldquoImport and Export entry declarations shall be signed only by a customs broker under oath based on the covering documents submittedrdquo

63

The implementing regulations therefore in not allowing corporations from making and filing goods declarations themselves and requiring brokers directly or brokerage forwarding companies with signing brokers are not compliant and is in fact contrary to this RKC Standard

C-1 S-1 Work for the further amendment of implementing regulations to fully become

compliant with the RKC After all the Customs law itself (PD 1464) is fully in compliant (RA 9280) while the Customs Brokers Act never revoked this recognition

c Rights of the declarant Standard 39 - Drawing samples

P Before lodging the Goods declaration the declarant shall be allowed under such conditions as may be laid down by the Customs

a To inspect the goods and b To draw samples

N Compliance should be no problem even if legislation is silent since Collectors of Customs have been allowing these

C-3 S-3

The Goods declaration b Documents supporting the Goods declaration Standard 319 ndash Translation of supporting documents

P The Customs shall not require a translation of the particulars of supporting documents except when necessary to permit processing of the Goods declaration

G The layout of many supporting documents will meet international standards so the information contained in them may be easily understood Standard 319 requires that Customs should not routinely demand translation of supporting documents presented in another language when processing the Goods declaration It should only be necessary where the information is ambiguous or not easily accessible

C-1 Sec 3517 of TCCP provides that ldquodocument in a foreign country must be accompanied with a translation in the official language of this countryrdquo

S-1 Since this is a general annex standard the TCCP must be amended not to make the translation mandatory ie provide an exemption when the document conforms to international standards for those documents such that the data contained therein can be understood without the need for translation

Standard 320 ndash Lodgement at a designated Customs office

P The Customs shall permit the lodging of the Goods declaration at any designated Customs office

64

N In actuality and realistically at present lodgment can only be at Customhouse which has the shipping manifest for manifest clearance and where the goods are located so examination can be effected With the new IT system under development however a central database of manifest will be generated so entries can be manifested no matter where they may have been filed The new IT system even provides for the scanning of the supporting documents including those needed for the examination of the goods so these maybe made available from any customs office Thus a declarant can file goods declaration from anywhere and obtain service from the particular customs office designated by the business rules to process it and issue the clearance For the most part the declarant will be dealing with a virtual customs office and should therefore be indifferent Nonetheless there may be situations as in yellow lane processing where for the convenience of the declarant the document required maybe presented to a nearest customs offices which must then forward the same to the needing office by secured means

C-34 Code is silent S-3 Allow submission of required documents in case of yellow lane shipments at

customshouse most convenient to declarant Standard 324

P At the request of the declarant and for reasons deemed valid by the Customs the latter shall extend the time limit prescribed for lodging the Goods declaration

N The 30 days period as well as the 15 days to claim from the date of posting of the notice to claim are not extendible

C-1 S-1

Standard 325

P National legislation shall make provision for the lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods

N bull There is nothing in the TCCP which prohibits pre-goods arrival lodging and checking of the goods declaration

bull However current regulations do not support this procedure

o the first step under existing procedure requires that the cargo manifest must have already been submitted so that important details like weight measurement marks and numbers can be compared with those in the entry

o one of the determinants of the applicable rate of duty is the one prevailing at the time of goods arrival

o the determinant of the applicable exchange rate is the time of registration of the carrying vessel

The above notwithstanding regulations may be amended to allow this procedure The challenge is in developing an extension to the customs application to provide for the differential processing of advance goods declarations

C-3 S-1

65

Transitional Standard 328 ndash Amendment of a Goods declaration

P The Customs shall permit the declarant to amend the Goods declaration if a request is received after checking of the Goods declaration has commenced if the reasons given by the declarant are deemed valid by the Customs

N Checking of the goods declaration may lead to a number of results If the result is that there is over payment as when in the case of short landed shipments amendment of the declaration may be allowed When additional duties and taxes are found and the level of discrepancy does not warrant seizure of the goods amendment may similarly be allowable But when the level of the discrepancy warrants seizure goods declaration can no longer be amended

C-34 Legislation is silent on request for amendment of goods declaration although both current and future computer systems can handle this procedure (Appendix 1)

S Issuance of legislation clearly defining when amendments may be allowed and the procedure for introducing such amendment in the ICT

Transitional Standard 329 ndash Withdrawal of Goods Declaration

P The declarant shall be allowed to withdraw the Goods declaration and apply for another Customs procedure provided that the request to do so is made to the Customs before the goods have been released and that the reasons are deemed valid by the Customs

C-2

S-3 Issuance of legislation clearly defining when amendments may be allowed and the procedure for introducing such amendment in the ICT

Standard 331 ndash Checking the Goods declaration


G Standard 331 states that Customs as a general rule Customs will verify the following bull That the tariff classification in the Goods declaration corresponds to the

description of the goods bull That the rates of duties and taxes indicated are those in force bull That the particulars in the Goods declaration correspond with those in the

supporting documents submitted especially in regard to the quantity value and country of origin of the goods

bull The authenticity and validity of the supporting documents and bull That the Customs procedure requested is appropriate bull In an electronic environment the specifications for checking of the Goods

declaration should be integrated in the automated clearance system bull Customs should only require the declarant to present additional information or

documents when necessary to verify the accuracy of the particulars contained in the Goods declaration or supporting documents

bull Checking the Goods declaration may prompt Customs to take a sample or examine the goods in order to verify the particulars in the declaration

66

N In theory the actions required are fully integrated into the automated system and where the clearance channel is yellow or red the documentary requirements and the actions of officers are well defined under existing regulations In practice with the levels of selections mostly red with very little green this RKC standard is not being accomplished Previous administrations have set the level of selections to not more than 20 to be progressively pared down to at most 5 A number of CMOs have been issued mandating actions which are aligned to this RKC standard CMOs 10-92 104-92 8-93 4-94 15-96 and 37-97 among others

C-3 S-3 The level of selections must be risk based and must take into account the capability

and conditions of the port to support A trade and transport facilitation group must peg the levels of selections to realistic levels

Special procedures for authorized persons Transitional Standard 332 ndash Authorized Persons and Special Procedures

P For authorized persons who meet criteria specified by the Customs including having an appropriate record of compliance with Customs requirements and a satisfactory system for managing their commercial records the Customs shall provide for special procedures

G It is a requirement that at least two of the five special procedures of this Transitory Standard be introduced by Customs administrations and that other special procedures are considered for possible implementation

N The special procedures described in this standard for entities with good track record are not part of current legislation The special procedures implemented by Philippine Customs in the past are not the kind envisioned in this standard

Special Procedure 1

P Release of goods on the provision of the minimum information necessary to identify the goods and permit the subsequent completion of the final Goods declaration

G Information required on the initial declaration should be limited to that necessary to determine the admissibility of the goods and normally includes the description quantity and value of the goods In some administrations the information in the initial declaration can simply comprise the declarantrsquos authorization number and a commercially recognized description of the goods or the commercial reference to the goods in the authorized persons records With this reference to the authorized persons records it is possible for Customs to have access to all the information necessary Some administrations also allow a commercial or official document to be the initial declaration

N Allowed case to case basis by a customs collector under a procedure called Special Permit to Transfer when it is not practical to keep the goods nor examine the shipment in port But this procedure does not release but rather only transfers consignments under continuous guard

C-14 May be managed better under the First Import Procedure (FIP) of Asycuda

67

Special Procedure 2

P Clearance of the goods at the declarants premises or another place authorized by the Customs

N Allowed case to case by collector when it is not practical to store nor examine the goods in port The procedure is not for authorized persons as defined under the standard but given to anyone when the circumstances of the shipment warrants doing so

C-24 S Compliance with Special Procedures 1 and 2 should be sufficient for purposes of

accession to RKC Compliance with Special Procedures 1 and 2 is feasible in the short term since historically BOC has been allowing release under minimum of information and examination away from the customs station on a case to case basis under the Special Permit to Transfer or SPT Whatrsquos needed is to expand SPT so it can be availed of by ldquoauthorized personsrdquo for most if not all its consignments and not only when the nature of the shipment or the conditions of the port warrants it Also needed are clear criteria for qualification as authorized person and an expedient system for availing of these special procedures The document and procedure FIP of Trade World Manager should be considered as the means for implementing these special procedures

Special Procedures 3

P Allowing a single Goods declaration for all imports or exports in a given period where goods are imported or exported frequently by the same person

N Current memorandum orders on the form and procedure for filing goods declarations do not allow periodic filings In general one goods declaration is required per bill of lading The TCCP also required imports to be entered within a non-extendable period of 30 days from the discharge of the last package from the vessel putting a limit to the period if ever compliance with this standard is desired Old and New ICT systems will also not be able to respond because of the one entry to one bill of lading manifesting system Implementing this standard to all imports may also be prejudicial to the revenue program Use of e-commerce and automation in the shipment by shipment goods declaration will put the process nearly at par with a simplified release procedure coupled with periodic goods declaration envisioned in this RKC standard However periodic export declaration is already being allowed for some export commodities like Bananas Legislation can be amended to allow this procedure when national competitiveness requires

C-24

S Compliance with the following three (3) other special procedures should be pursued when the need and readiness of trade for these procedures come As of this time

68

implementation of these special procedures is not crucial even as it is not also necessary for the Philippine accession to the RKC


P Use of the authorized persons commercial records to self-assess their duty and tax liability and where appropriate to ensure compliance with other Customs requirements

G Trader himself determines the duties and taxes due based on his own relevant system and commercial records which meet Customs criteria for authorization to use special procedures Goods released at importation immediately upon their arrival in the Customs territory Once the physical movement of the goods has taken place a declaration should be furnished by the authorized person or their representative normally the amount of duties and taxes that will be due Other information may be required in the declaration such as value and origin but it should be kept to a minimum Some administrations require a supplementary declaration which may not be required for a month or more after the release of the goods

N Making a declaration based on the importers own system and moving this seamlessly into the customs declaration system is the ideal setup and must therefore be encouraged and supported

C-3

S Customs must set standards for ICT systems that may qualify the importer or exporter to self-assess based on the system Accredited VASPs must be directed to have the capability for organizing an authorized persons systems to operate with customs on this basis This procedure maybe implemented separate from the immediate release and periodic declaration standards


P Allowing the lodgement of the Goods declaration by means of an entry in the records of the authorized person to be supported subsequently by a supplementary Goods declaration

G Where release or clearance is allowed at approved premises Goods declaration may simply be an entry in the authorized persons commercial records Customs must be satisfied that the applicants records will enable them to carry out effective checks particularly retrospective audits Entry in the records consists of specific information concerning the goods such as the shipper consignee quantity value and country of origin the date of release of those goods and any other information which may be required by Customs for the application of the Customs procedure concerned

N C-1 S Private Sector must first undertake a survey on the need and readiness of trade for

this special procedure

69

Examination of the goods a Time required for examination of goods Standard 335 ndash Inspection of goods by other competent authorities

P If the goods must be inspected by other competent authorities and the Customs also schedules an examination the Customs shall ensure that the inspections are coordinated and if possible carried out at the same time

C-34 Can be flagged in the IT system (as to requiring the presence of other competent authorities) but no specific legislation mandating these standards

S Issue a General Manual for Customs Examination base of these RKC standards and of the principles below bull Integrated interventions of competent authorities with respective mandates

over the cross border flow of goods bull Examination based on risk assessment and taking into account the capacity

and conditions of the port Enter into MOA with competent authorities for a single point of control or a designated examination area where all concerned authorities can hold office withimmediate availability of their experts and that would provide 24x7 services particularly for perishable and sensitive goods Provide ICT system with database of interventions needed by HS Code and automated procedure for notifying agencies concerned of presence of shipments and goods declarations needing interventions Make as part of the responsibilities of the assigned examiner to arrange for the presence of other competent authorities in the examination

b Presence of the declarant at examination of goods Standard 336 ndash Presence of the declarant at the examination of the goods

P The Customs shall consider requests by the declarant to be present or to be represented at the examination of the goods Such requests shall be granted unless exceptional circumstances exist

C-3 While legislation is silent compliance on this standard will not be difficult In reality opening of shipments for examination is only allowed by the port operator when the importer or his representative makes the request or when customs directs it

Standard 337

P If the Customs deem it useful they shall require the declarant to be present or to be represented at the examination of the goods to give them any assistance necessary to facilitate the examination

S For Standards 36 and 37 the above operations manual described in Standard 35 must also provide as a general rule for goods examination without the presence of the declarant However the presence of the declarant maybe allowed upon request for valid reasons or when requires presence to facilitate the examination of the goods

70

Customs and Port operator systems must be interfaced such that when the declaration is selected for examination the operator will be instructed to have the shipment transferred to the single control point or DEA for the examination to take place at once

Release of goods Standard 341 ndash Prior permission for release of the goods

P If the Customs are satisfied that the declarant will subsequently accomplish all the formalities in respect of clearance they shall release the goods provided that the declarant produces a commercial or official document giving the main particulars of the consignment concerned and acceptable to the Customs and that security where required has been furnished to ensure collection of any applicable duties and taxes

G This standard does not require a Goods declaration at all even an incomplete one Release can be effected herein based on a commercial document such as an invoice a purchase order bill of lading or similar document that would be specified by Customs If the goods are subject to certain veterinary or health requirement these are required to be complied as well A security for the duties and taxes is even optional

N While this is a good facilitation measure particularly for urgent air shipments Collectors of Customs who are permitting this on a case to case basis are putting themselves at risk since there are no regulations specifically allowing this Current regulations require that all releases be authorized on the appropriate customs form Also Sec 1502 provides that no collector shall deliver imported articles without surrender of the bill of lading except on written order of the carrier or agent Standard 313 which is observed requires a Goods declaration which may be an incomplete or a provisional one

C-1 S To be in compliance regulations must be issued Formalization and Expansion of the

terminal and ramp releases for certain types of cargo should be explored as a way of immediately complying

Chapter 4 Duties and Taxes

A Assessment Collection and Payment of Duties and Taxes Standard 410

P National legislation shall specify the period within which the Customs may take legal action to collect duties and taxes not paid by the due date

N The phrase ldquo period within which the Customs may take legal actionrdquo may mean (1) action may only be taken within the period or (2) action may only commence at the start of the period Verification with the WCO favored the first one or the prescriptive interpretation To comply with this standard a law on prescription or debt write-off period must be passed This will remedy the current difficulty of customs with billions in pesos in its books of accounts that have no more chance of being collected This bottomlessgarbage can only create inefficiencies in other customs operations including

71

facilitating trade C-1 S Pass a law allowing customs to write off debts or payables after the lapse of a

number of years as for example 3 years from the date the accountability becomes due


P Repayment shall be granted in respect of imported or exported goods which are found to have been defective or otherwise not in accordance with the agreed specifications at the time of importation or exportation and are returned either to the supplier or to another person designated by the supplier subject to the following conditions bull The goods have not been worked repaired or used in the country of

importation and are re-exported within a reasonable time bull The goods have not been worked repaired or used in the country to which

they were exported and are re-imported within a reasonable time bull Use of the goods shall however not hinder the repayment if such use was

indispensable to discover the defects or other circumstances which caused the re-exportation or re-importation of the goods

As an alternative to re-exportation or re-importation the goods may be abandoned to the Revenue or destroyed or rendered commercially valueless under Customs control as the Customs may decide Such abandonment or destruction shall not entail any cost to the Revenue

C-1 Not among those situations allowed under the Abatement and Refund Provisions of Customs nor Tax Code However importer can re-export as zero rated and then get a tax credit

S Since this situation should likewise be considered for abatement or refund both the Customs and Tax Codes must be amended

Transitional Standard 420

P Where permission is given by the Customs for goods originally declared for a Customs procedure with payment of duties and taxes to be placed under another Customs procedure repayment shall be made of any duties and taxes charged in excess of the amount due under the new procedure

N The situation contemplated in this transitory standard is not among those specifically enumerated as allowable for refund The situation depicted is however meritorious for refund which must be made clear in the national legislation The new ICT (TWM + Asycuda) can handle withdrawal of original entry with corresponding rectification of databases and filing of new declaration following the new procedure even after the goods have been released from customs control The system can provide support to the refund process

C-3 S What is needed is an order that defines conditions for allowing conversion to new

72

procedure and how this will be managed under the ICT system Standard 421

P Decisions on claims for repayment shall be reached and notified in writing to the persons concerned without undue delay and repayment of amounts overcharged shall be made as soon as possible after the verification of claims

C-3

S Same as above

Standard 422

P Where it is established by the Customs that the overcharge is a result of an error on the part of the Customs in assessing the duties and taxes repayment shall be made as a matter of priority

C-3

S Same as above

Chapter 5 Security

Standard 56

P Where security is required the amount of security to be provided shall be as low aspossible and in respect of the payment of duties and taxes shall not exceed the amount potentially chargeable

N While the face value of the security is at least 100 of the amount potentially chargeable and in the case of some re-export bonds is 150 the cost of the security is low mostly less than 1 of the face value Still strictly speaking there is no compliance with this RKC standard in those cases where the face value of the bond is in excess of 100

S Amend the customs code to make the face value of the security not more than 100 of the liability This will align our legislation to the ATA Carnet To discourage breach of bond surcharges must be provided

Standard 57

P Where security has been furnished it shall be discharged as soon as possible after the Customs are satisfied that the obligations under which the security was required have been duly fulfilled

N Warehousing regulations provide that when part of the obligation has been discharged and the remaining obligation only applies to part of the secured amount a commensurate amount of the security may be released if requested by the person concerned provided the amount of security is sufficient to justify this action There is no legislation saying that the security shall be quickly discharged Actual cancellation takes very long because of policy to liquidate entry first before bonds cancellation long time to account for compliance with bonded undertaking and inefficient liquidation system

73

Problem of large due and demandable bonds that should have been canceled remain

C-3 S Automate bonds management as to make bonds cancellation automatic when the

bonded undertaking shall have been discharged Allow bonds cancellation ahead of liquidation of entry similar to partial bonds cancellation in case of warehousing


Standard 65

P The Customs shall adopt a compliance measurement strategy to support risk management

G Compliance measurement is a phrase used when statistically valid random sampling techniques are used to determine the degree to which traders carriers imported goods etc conform to Customs rules and procedures Customs gathers data from a variety of sources both internal and external and through both manual and automated means With the data (import and export records) the tools (statistical analysis) and the methodology (systematic analysis of large traders or commodities) Customs can make reasonable informed conclusions about the compliance rates of many entities

N There is no Compliance Measurement Strategy (CMS) in operation now at BOC nor is there an order or regulation providing for the use of this System

C-3 S CMS must be developed and operated as part of the Risk Management and

Selectivity Systems as well as of the Post Audit of BOC Technical Assistance must be sought for BOC in coordination with private sector group for the development and implementation of the CMS

Standard 67

P The Customs shall seek to co-operate with other Customs administrations and seek to conclude mutual administrative assistance agreements to enhance Customs control

N Philippine Customs has entered into several international agreements and is still pursuing similar initiatives For example the Philippines is leading the efforts on the Asean Single Window But TCCP and national legislation is silent on this

C-3 S4

Standard 68

P The Customs shall seek to co-operate with the trade and seek to conclude Memoranda of Understanding to enhance Customs control

74

N Customs already have several MOUs with trade the and business groups to enhance customs control and facilitate trade

C-3 S4 Direct not only Customs but all other Agencies with cross border responsibilities to

observe this Standard 610

P The Customs shall evaluate traders commercial systems where those systems have an impact on Customs operations to ensure compliance with Customs requirements

N BOC does not have the capability to evaluate traders commercial systems nor the legal basis for undertaking such and organizing its processing system to make use of such commercial systems

C-3 S Undertake survey to identify traders with commercial systems that can qualify for use

in Customs Control procedures with or without interface with the customs systems and who are willing to submit their system to customs Issue legislation defining an accreditation procedure for such commercial system defining its use in the customs control and clearance process defining the responsibilities of owners of such systems and providing benefits for the use of such systems

Chapter 7 Application of Information Technology

For most of Chapter 7 standards the TCCP as amended by the E-Commerce Act is silent ie the standards although largely observed are not reflected in current legislation Fortunately observance of most of the internationally accepted ICT standards were considered in the design and development of both Asycuda and Trade World Manager which are the core systems of the Customs ICT The proposed general strategy to clearly demonstrate compliance with Chapter 7 and at the same time insure the healthy development of ICT in Customs is to issue implementing guidelines to the E-Commerce Act directing the observance of the RKC-ICT standards such as consultation cost effectiveness and use of technical standards Standard 71

P The Customs shall apply information technology to support Customs operations where it is cost-effective and efficient for the Customs and for the trade The Customs shall specify the conditions for its application

Standard 72

P When introducing computer applications the Customs shall use relevant internationally accepted standards

N For the new system schedule for implementation this year the message standard that the Customs System AsycudaWorld accepts is XML coming from the VASPs The public itself initially will have to send XML e-documents to the VASPs Subsequently the VASPs will provide message translation engines to be able to accept e-documents in other internationally accepted data standards such as UNEDIFACT UNCEFACT ANSI X12 XML ebXML and RosettaNet

75

The communication protocol shall be TCPIP which will allow internet access between the customs and its clients Security and authentication procedures shall use public key infrastructure a security method that has been accepted by the Philippine Supreme Court as evidence that an electronic transaction has been consummated

Standard 73

P The introduction of information technology shall be carried out in consultation with all relevant parties directly affected to the greatest extent possible

N Customs has undertaken and is still undertaking a series of stakeholders meeting in the design development and implementation of the eCustoms system While certain sectors are not satisfied with the level of consultation on the whole Customs and its providers consider it an imperative to consult

Standard 74

P New or revised national legislation shall provide for bull Electronic commerce methods as an alternative to paper-based documentary

requirements bull Electronic as well as paper-based authentication methods bull The right of the Customs to retain information for their own use and as

appropriate to exchange such information with other Customs administrations and all other legally approved parties by means of electronic commerce techniques

N bull The E-Commerce law mandates Customs and all other government agencies to make their services available electronically

bull Customs will mandate the use of their electronic systems The authentication

technology prescribed under the law is PKI (Public Key Infrastructure)

bull Customs declarations are public records the information from which Customs can keep for itself and can provide others for as long as it will serve the national interest and prevent fraud and other offenses against Customs

bull Under the ASEAN Single Electronic Window Project the Customs Services of the member countries agreed to exchange information starting with the export declaration and certificates of origin Agreement has been entered into on Dec 9 2005 the Protocol to which defined the documents to be exchanged thru the single window The Philippines and Thailand have piloted the system to make the exchange electronic


Standard 81

P Persons concerned shall have the choice of transacting business with the Customs either directly or by designating a third party to act on their behalf

C-1 CAO 3-2006-A which implemented RA 9280 made it mandatory for some importers and exporters to use Customs brokers instead of transacting directly themselves

76

Section 41 for example required importers and exporters engaged in the general import and export business of commercial nature to use the services of a Customs broker as against the RKCS standard of giving choice to the importers ldquoof transacting business with Customs either directly or by designating a third party to act on their behalfrdquo

S Standard 83

P The Customs transactions where the person concerned elects to do business on his own account shall not be treated less favorably or be subject to more stringent requirements than those Customs transactions which are handled for the person concerned by a third party

C-3 S Amend CAO 3-2006A to include this

Standard 84

P A person designated as a third party shall have the same rights as the person who designated him in those matters related to transacting business with the Customs

C-3

S Amend CAO 3-2006A to include this Standard 85

P The Customs shall provide for third parties to participate in their formal consultations with the trade

C-3 In practice they are normally consulted S Include this in a CAO dealing with the issuance of regulations requiring a consultation

with stakeholders and affected groups

Chapter 9 Information Decisions and Rulings Supplied by the Customs

N For most of these standards the Customs Code and other legislations are mostly silent To force Customs and other concerned agencies to inform the public of all its issuances publication in a newspaper of general circulation and furnishing the UP Law Center is a requirement else the issuance will have no force and effect Every now and then private sector initiatives following a business model to readily make available relevant information is allowed by Customs but these initiatives are not sustained Notwithstanding this conscious effort to make relevant information ldquoreadily available to interested partiesrdquo and in general to observed these standards to the best of available resources it remains contestable if actual level of observance is what is envisioned in the RKC

77

S The manualization of Customs Policies and Operational Systems and Procedures and Regulations the provision for their regular updating by a professional group must be and its availability together with the customs laws and relevant issuance both in customs websiteportallibrary must be a priority project The websiteportal must be equipped with search engine to allow persons to extract information themselves However provision must be made for persons who are unable to get information electronically but in writing or by phone Customs must therefore be encouraged to set up a Customs Contact Center similar to the BIR Contact Center as a strategy to complying with the standards in this RKC Chapter Private sector initiatives for the creation maintenance and dissemination of relevant information for a fee must be encouraged by Customs and if private sector does not take on this then Customs itself must provide Information must not be limited to policies laws orders rules and regulations in effect but also proposed legislation under doing deliberation in advance of issuance Must for disseminations are rulings and decisions

A Information of General Application Standard 91

P The Customs shall ensure that all relevant information of general application pertaining to Customs law is readily available to any interested person

Standard 92

P When information that has been made available must be amended due to changes in Customs law administrative arrangements or requirements the Customs shall make the revised information readily available sufficiently in advance of the entry into force of the changes to enable interested persons to take account of them unless advance notice is precluded


P The Customs shall use information technology to enhance the provision of information

N Customs Website currently provides only rudimentary static information that does not respond to the RKC

Effecting Amendment to the Import SAD in the ICT Present vs New Systems For selected goods declarations (red and yellow channels) this procedure can be effected at the level of a Customs Appraiser but only prior to assessment or reversion from selected to greenlane processing For green channel entries these are systems assessed right after selectivity so the appraiser can no longer make regular amendment Selected shipments already reverted green channel are similarly assessed and likewise unamendable in the regular fashion In both situations any request for amendment to the SAD can only be effected thru post entry under the current system and thru entry removal and replacement when the new system is implemented In the former procedure a second

78

version of the SAD is created under Post Entry which reflects the changes made while retaining the original version of the entry Under the revised ICT should amendment be allowed after system assessment the previous record will be removed and a new declaration will have to be made For all cases what is needed is to clearly specify the conditions under which amendment maybe allowed One issue is the definition or meaning of the phrase in Standard 327 ldquoprovided that when the request is received they have not begun to check the Goods declaration or to examine the goodsrdquo It is recommended that this provision be interpreted to mean ldquoselectedrdquo or not selected or green but subsequently ordered to be examined as when derogatory information is received Furthermore for purposes of Standard 328 legislation must be made clear that amendment may only be allowed provided that the results of the examination or action taken by Customs does not warrant the seizure of the goods

79

Annex C

Specific Annex Gap Analysis Compliant Provisions

bull Specific Annex Gap Analysis Compliant Provisions LEGEND o Specific Annex A Arrival of goods in a customs territory

Chapter 1 Formalities prior to the lodgement of the Goods declaration Recommended Practice 2 Introduction of goods into the Customs territory

a Places at which goods may be introduced into the Customs territory

Standard 3 b Obligations of the carrier

Standard 4 Standard 5 Standard 6 Standard 8 Recommended Practice 11

Production of goods to the Customs b Arrival outside working hours

Standard 13 Recommended Practice 14

Unloading a Places of unloading


b Commencement of unloading Standard 17 Recommended Practice 18

Charges Standard 19

Chapter 2 Temporary storage of goods Strategy Principles

Standard 1 Standard 2 Recommended Practice 3

Documentation Standard 4

Management of temporary stores Standard 6

Authorized operations Standard 7

Duration of temporary storage Standard 9

Goods deteriorated or damaged Recommended Practice 11

Removal from a temporary store Standard 12 Standard 13

o Specific Annex B Importation Strategy Chapter 1 Clearance for home use

Documentation Recommended Practice 2

Chapter 2 Re-importation in the same state

80

Field of application Standard 2 Standard 3 Standard 4 Standard 5 Standard 6 Standard 7

Time limit for the re-importation in the same state Standard 8

Competent Customs offices Standard 9

Goods declaration Standard 10

Chapter 3 Relief from import duties and taxes Field of application

Standard 2 Standard 3 Recommended Practice 4 Standard 5

o Specific Annex C Exportation Strategy Annex C1 Outright exportation

Evidence of arrival at destination Standard 3

o Specific Annex D Customs Warehouses and Free Zones Strategy Chapter 1 Customs warehouses

Classes of Customs warehouses Standard 3

Establishment management and control Standard 4

Admission of goods Standard 6

Deterioration of goods Standard 13

Removal of goods Standard 14 Standard 15

Closure of a Customs warehouses Standard 16

Chapter 2 Free Zones Establishment and control

Standard 2 Admission of goods

Standard 5 Recommended Practice 6 Standard 7 Standard 8

Security Recommended Practice 10

Authorized operations Standard 11 Standard 12

Goods consumed within the free zone Standard 13

Duration of stay

81

Standard 14 Removal of goods


Assessment of duties and taxes Standard 19 Standard 20

Closure of a free zone Standard 21

o Specific Annex E Transit Chapter 1 Customs transit

Field of application Standard 3

Formalities at the office of departure b Sealing and identification of consignments

Standard 8 Recommended Practice 9 Standard 10 Standard 13 Recommended Practice 14

Termination of Customs transit Standard 23 Standard 24 Recommended Practice 25

Chapter 2 Transshipment Principles


Admission to transshipment a Declaration


b Examination and identification of goods Standard 7

c Additional control measures Standard 8 Recommended Practice 9 Recommended Practice 10

Chapter 3 Carriage of goods coastwise Coverage Field of application


Loading and unloading Standard 7 Recommended Practice 10


o Specific Annex F Processing Chapter 1 Inward processing

Field of application Standard 2 Recommended Practice 4 Standard 5 Recommended Practice 6

82

Recommended Practice 7 Placing goods under inward processing

a Authorization for inward processing Standard 8 Standard 9 Recommended Practice 11 Standard 12 Recommended Practice 13

Stay of the goods in the Customs territory Standard 15 Recommended Practice 18

Termination of inward processing b Other methods of disposal

Recommended Practice 23 Standard 24

Chapter 3 Drawback Field of application

Standard 2 Payment of drawback

Standard 7 o Specific Annex G Temporary Admission

Coverage Field of application

Standard 2 Standard 3 Standard 4

Formalities prior to the granting of temporary admission Standard 7 Recommended Practice 8

Time limit for re-exportation Standard 13

Cases of temporary admission a Total condition relief from import duties and taxes

Recommended Practice 22 o Specific Annex H Offences

Coverage Overall Strategy Principles


Investigation and establishment of Customs offences Standard 5 Standard 7 Standard 8

Procedure to be followed when a Customs offence is discovered Standard 9

Seizure or detention of the goods or means of transport Standard 11 Standard 12 Standard 13 Recommended Practice 14 Recommended Practice 16 Recommended Practice 17

Detention of Persons Standard 18

83

Administrative settlement of Customs offences Recommended Practice 20 Standard 22 Standard 23 Standard 24 Standard 26

Right of Appeal Standard 27

o Specific Annex J Special Procedures Background Strategy Chapter 1 Travellers

Field of application Standard 2 Standard 3 Recommended Practice 6 Recommended Practice 7 Recommended Practice 8 Standard 10 Standard 11 Standard 12 Standard 13

Entry Standard 18 Standard 19 Standard 20 Standard 21 Standard 22 Standard 23 Standard 30

Re-exportation Standard 32

Departure Standard 33 Standard 34 Standard 35 Standard 36

Transit passengers Standard 38

Chapter 2 Postal traffic Principles

Standard 2 Clearance of postal items

b Production to the Customs Standard 6 Standard 7 Recommended Practice 8

Chapter 3 Means of transport for commercial use Temporary admission of means of transport for commercial use

Recommended Practice 3 Standard 4 Standard 5 Recommended Practice 6

Temporary admission of parts and equipment Recommended Practice 7 Recommended Practice 8

84

Arrival Standard 9

Departure Standard 15

Chapter 4 Stores Strategy Stores on board arriving vessels aircraft or trains

a Exemption from import duties and taxes Standard 3 Standard 5

Supply of stores exempted from duties and taxes Standard 15 Standard 16 Standard 17

Chapter 5Relief Consignments Recommendations Field of Application

Standard 3 Recommended Practice 5 Recommended Practice 6

o Specific Annex K Origin Chapter 1 Rules of origin

Coverage Overall Strategy Principle

Standard 1 Rules of Origin

Standard 2 Recommended Practice 3 Recommended Practice 4 Recommended Practice 5 Recommended Practice 6

Special cases of qualification for origin Recommended Practice 7 Recommended Practice 8 Recommended Practice 9 Recommended Practice 10 Standard 11

Direct transport rule Recommended Practice 12

Information concerning rules of origin Standard 13

Chapter 2 Documentary evidence of origin Requirement of documentary evidence of origin

Recommended Practice 5 Languages to be used

Recommended Practice 7 Authorities and other bodies empowered to issue certificates of origin


Sanctions Standard 13

Chapter 3 Control of Documentary evidence of origin Reciprocity

Standard 2 Requests for control

85

Recommended Practice 3 Standard 4 Standard 5 Standard 6 Standard 7 Standard 8 Standard 9

Release of the goods Standard 10

Miscellaneous provisions Standard 11 Standard 12 Standard 13



Specific Annex A Arrival of goods in a customs territory

Accept Annex A but enter reservations on

bull Recommended Practice 12 Chapter 1 since TCCP requires documents to be submitted in the official language and

bull Recommended Practice 10 of Chapter 2 since TCCP does not provide for extension of the

period of temporary storage All other Standards and Recommended Practices must be reflected in a Manual of Operations Customs does not have one now and this process of acceding to the RKC is a golden opportunity to make one

Chapter 1 Formalities prior to the lodgement of the Goods declaration

Recommended Practice 2

P Customs formalities prior to the lodgement of the Goods declaration should apply equally without regard to the country of origin of the goods or the country from which they arrived

Introduction of goods into the Customs territory a Places at which goods may be introduced into the Customs territory Standard 3

P National legislation shall specify the places at which goods may be introduced into the Customs territory Only when they consider it necessary for control purposes shall the Customs specify

86

the routes which must be used to convey the goods directly to a designated Customs office or other places specified by the Customs In determining these places and routes the factors to be taken into account shall include the particular requirements of the trade This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory

N bull Section 702 of the TCCP empowers the President on recommendation of the Commissioner of Customs and the Minister of Finance to open international ports of entries

bull Section 606 empowers the President to subject premises to the jurisdiction of the

Bureau of Customs bull Section 1001 makes it the duty of vessels engaged in foreign trade to touch at

ports of entry only except as otherwise specifically allowed bull Section 1101 authorizes the Secretary of Finance upon recommendation of the

Commissioner of Customs and the Director of the Civil Aeronautics Administration to designate airports of entry for civil aircraft which shall be considered as a port of entry for aliens arriving on such aircraft and as a place for quarantine inspection

b Obligations of the carrier Standard 4

P The carrier shall be held responsible to the Customs for ensuring that all goods are included in the cargo declaration or are brought to the attention of the Customs in another authorized manner

N Sections 1004 1005 and 1105 require the master of the vessel or pilot-in-command to produce documents among which are manifest and list of all cargo laden on board

Standard 5

P The fact of having introduced goods into the Customs territory shall entail the obligation for the carrier to convey them directly using designated routes where required and without delay to a designated Customs office or other place specified by the Customs In doing so the nature of the goods or their packaging shall not be altered nor shall any seals be interfered with This Standard shall not apply to goods on board vessels or aircraft crossing the Customs territory that do not call at a port or airport situated in that Customs territory

N Section 1021 requires the master of the vessel to state under oath before departure that all cargo conveyed on said vessel with destination to the Philippines has been duly discharged or accounted for

Standard 6

P Where the conveyance of the goods from the place of their introduction into the Customs territory to a designated Customs office or other specified place is interrupted by accident or force majeure the carrier shall be required to take

87

reasonable precautions to prevent the goods from entering into unauthorized circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstance which has interrupted the journey

N Sections 1016 and 1017 stipulate the responsibilities of the master of the vessel in situations described

Standard 8

P Where the Customs require documentation in respect of the production of the goods to the Customs this shall not be required to contain more than the information necessary to identify the goods and the means of transport

N The guidelines to this recommended practice provides that the documents required for the production of goods should contain no more than a description of the goods and of the packages (marks and numbers quantity and weight and an identification of the means of transport) However for purposes of risk analysis and advance clearance which are likewise recommended best practices consignee and shipper are very important data elements Also Section 1005 of the TCCP specifically provides that manifest shall include the port of departure the port of delivery and the names of the consignees in addition to the marks numbers quantity and description of the packages These data elements are all in the ships regular manifest and all are provided by the shipper per the pro-forma bill of lading or airway bill Strictly limiting the data elements in the manifest to the enumerations in the guidelines would not meet the present requirements of Philippine Customs However the guidelines are non-binding and what is important is that legislation does not require data that is not being used for effective customs control Viewed from this ldquousefulnessrdquo standpoint legislation is compliant with this standard


P The Customs office responsible for the acceptance of the documentation required for the production of the goods should also be competent for acceptance of the Goods declaration

N All open ports of entries are all manned and can received both manifests and entries Production of goods to the Customs b Arrival outside working hours Standard 13

P The Customs shall specify the precautions to be taken by the carrier to prevent the goods from entering into unauthorized circulation in the Customs territory when they arrive at a Customs office outside working hours

N bull Standard 13 requires Customs to indicate the precautions that the carrier must take Usually when the goods arrive outside the working hours the carrier is required to keep the goods at a specific place at or in the vicinity of this Customs office and that meets Customs security requirements

bull Carriers are not allowed to unload until after boarding formalities have been

88

completed and documents on goods carried on board secured Boarding Officers and Guards are required while the vessel is in port


P At the request of the carrier and for reasons deemed valid by the Customs the latter should insofar as possible allow the Customs formalities prior to the lodgement of the Goods declaration to be accomplished outside the designated hours of business of the Customs

N Port operations are on a 24-hour basis in all ports of entries and customs officers are entitled to overtime pay for working outside regular working period

Unloading a Places of unloading Standard 15

P National legislation shall specify the places which are approved for unloading N The opening of ports of entry are covered by legislation


P At the request of the person concerned and for reasons deemed valid by the Customs the latter should allow goods to be unloaded at a place other than the one approved for unloading

N There is an established procedure for authorizing vessels to call at a non-port of entry and unload goods thereat Section 1001 provides ldquoVessels engaged in foreign trade shall touch at ports of entry only except as otherwise specifically allowedrdquo

b Commencement of unloading Standard 17

P The commencement of unloading shall be permitted as soon as possible after the arrival of the means of transport at the place of unloading

N Section 1015 provides that unloading outside regular working hours maybe done on authority of the collector of customs conditioned on the payment of losses and overtime pay by the interested parties


P At the request of the person concerned and for reasons deemed valid by the Customs the latter should insofar as possible allow unloading to proceed outside the designated hours of business of the Customs

N Section 1015 of TCCP

89

Charges Standard 19

P Any expenses chargeable by the Customs in connection with bull Accomplishment of Customs formalities prior to the lodgement of the Goods

declaration outside the designated hours of business of the Customs bull Unloading goods at a place other than the one approved for unloading or bull Unloading goods outside the designated hours of business of the Customs

shall be limited to the approximate cost of the services rendered bull Shall be limited to the approximate cost of the services rendered

N Customs regulations on fees and charges specify the principle of cost recovery

Chapter 2 Temporary storage of goods

Strategybull Accept the Chapter bull Enter reservation on Recommended Practice Number 10 bull Issue regulations using the carriers commercial manifest even for those for further

movement to a secondary store Principles Standard 1

P Temporary storage of goods shall be governed by the provisions of this Chapter and insofar as applicable by the provisions of the General Annex

Standard 2

P The Customs shall authorize the establishment of temporary stores whenever they deem it necessary to meet the requirements of the trade

N Section 1901 and 1903 as well as Special Permits to Transfer Recommended Practice 3

P Temporary storage should be allowed for all goods irrespective of quantity country of origin or country from which they arrived However goods which constitute a hazard which are likely to affect other goods or which require special installations should be admitted only into temporary stores specially equipped and designated by the competent authorities to receive them

N A separate facility for dangerous goods is allowed to operate whenever the trade requires


P The only document to be required when goods are placed under temporary storage shall be that used to describe the goods when they are produced to the Customs

90

N In general the manifest is the only document required particularly for sea cargo where there is only one operator per port At NAIA there are several temporary stores For airlines with exclusive arrangement with a temporary store only the manifest is required However there are some airlines that carry cargo destined for 2 or more temporary stores In this case manifest is used for the main store and a special document is required for transfers to secondary store


P The Customs shall lay down the requirements as regards the construction layout and management of temporary stores and the arrangements for the storage of goods for stock-keeping and accounting and for Customs control

N Section 1903 Duration of temporary storage Standard 9

P Where national legislation lays down a time limit for temporary storage the time allowed shall be sufficient to enable the importer to complete the necessary formalities to place the goods under another Customs procedure

N The time limit for temporary store is limited by Section 1801 on the abandonment A total time of 45 days is more than sufficient to complete formalities


P Goods deteriorated spoiled or damaged by accident or force majeure before leaving the temporary store should be allowed to be cleared as if they had been imported in their deteriorated spoiled or damaged state provided that such deterioration spoilage or damage is duly established to the satisfaction of the Customs

N Section 1704 Abatement or Refund on Articles Lost or Destroyed after Arrival Removal from a temporary store Standard 12

P Any person having the right to dispose of the goods shall be entitled to remove them from a temporary store subject to compliance with the conditions and formalities in each case

N Sections 1501 to 1508 Standard 13

P National legislation shall specify the procedure to be followed when goods are not removed from a temporary store within the period allowed

N Sections 1801-02

91

Specific Annex B Importation Strategy

bull Accept Annex B bull Enter reservations on

o Recommended Practice2 Chapter1 that the alternative goods declaration to the standard format will be used only for some time sensitive air shipments such as company materials newspapers and periodicals as well as time sensitive imports that maybe cleared planeside

o Recommended Practice 6 and 7 of Chap 3 since its value to trade facilitation is minimal but revenue sensitive

bull Regularized Chapter 2 by including all the circumstances described in the chapter in a

regulation on Importation in the Same State and by including re-importation as among those electronic documents that can be processed under the ICT system Trade must be consulted on the most typical re-importation situations encountered so these may be provided regular processing as with the other customs operations An appropriate information system must also be developed and interface exports with the Integrated ICT to support this Customs regime

bull At same time care must be exercised to address risk to revenue as when there is no exportation or when the exportation was applied for refund

Chapter 1 Clearance for home use


P National legislation should provide that goods may be declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for home use

G Customs usually specifies the types of goods that can be declared in this manner and normally extends the facility for goods which are in large volumes and of low risk or are unconditionally free of duties and taxes This may include for example newspapers journals and periodicals certain bulk construction materials such as cement or sand etc The alternative format to the standard Goods declaration could be a commercial document for example an invoice or a transport document as long as the necessary particulars relating to the goods to be cleared for home use are contained in the commercial document Customs is usually satisfied with a commercial document where the goods to be cleared for home use are not liable to import duties and taxes and the Goods declaration is not used for the compilation of statistics A number of international efforts are underway to standardize commercial and transport documents (eg International Maritime Organization and International Civil Aviation Organization cargo declaration formats) The Economic Commission for Europe (UNECE) has adopted a Recommendation on an aligned invoice lay-out key for international trade which is an example of a standardized format for a commercial invoice The use of any of these standardized formats in lieu of a Goods declaration could be considered by administrations implementing this Recommended Practice

92

N For some time sensitive air shipments such as newspapers and periodicals terminal release is allowed using only simplified forms

S Enter Reservation that this standard will be limited to certain types of goods such as company materials documents newspapers and periodicals and time sensitive imports that may be cleared planeside upon arrival


G National legislation in most administrations usually includes provisions which enable

re-imported goods to enter back into the Customs territory free of import duties and taxes and provides for the repayment of any export duties and taxes paid on exportation

N Section 105- t of the TCCP on Philippine articles previously exported from the Philippines and returned without having been advanced in value or improved in condition by any process of manufacture or other means upon which no drawback or bounty has been allowed already covers most of the situations envisioned in this Chapter of Annex B There are no provisions in the Customs Code against the Standards and Recommended Practices on Re-importation Nonetheless it would do well for national legislation to provide specific guidelines on how to treat re-importation situations described herein instead of treating these on a case to case basis and decided by senior port officials procedures that do not lend to facilitation


P Re-importation in the same state shall be allowed even if only a part of the exported goods is re-imported

Standard 3

P When circumstances so justify re-importation in the same state shall be allowed even if the goods are re-imported by a person other than the person who exported them

Standard 4

P Re-importation in the same state shall not be refused on the grounds that the goods have been used or damaged or have deteriorated during their stay abroad

Standard 5

P Re-importation in the same state shall not be refused on the grounds that during their stay abroad the goods have undergone operations necessary for their preservation or maintenance provided however that their value at the time of exportation has not been enhanced by such operations

93

Standard 6

P Re-importation in the same state shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure

Standard 7

P Re-importation in the same state shall not be refused on the grounds that the goods were exported without notification of intended return


P Where time limits are fixed beyond which re-importation in the same state will not be granted such limits shall be of sufficient duration to take account of the differing circumstances pertaining to each type of case


P The Customs shall only require that goods re-imported in the same state be declared at the Customs office through which they were exported where this will facilitate the re-importation procedure


P No written Goods declaration shall be required for the re-importation in the same state of packings containers pallets and means of transport for commercial use which are in use for the international transport of goods subject to the satisfaction of the Customs that the packings containers pallets and means of transport for commercial use were in free circulation at the time of exportation

N The procedures for the release of empty containers do not require goods declaration Needed is to extend this procedure to pallets packings and similar equipments for the transportation of goods

Chapter 3 Relief from import duties and taxes


P National legislation shall enumerate the cases in which relief from import duties and taxes is granted

N Section 100 of the TCCP and 107 the NIRC subjects all imported articles to duty and vat respectively unless otherwise provided for in the said Codes or other laws

94

Standard 3

P Relief from import duties and taxes shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure

N Goods placed in FEZs Warehousing and Conditional Free Procedures when converted to Home Use may be granted relief from duties and taxes provided the basis provided is among those specifically provided in the laws


P Relief from import duties and taxes should be granted without regard to the country of origin of the goods or the country from which they arrived except where an international instrument provides for reciprocity

N Laws providing relief are pass by Congress and are granted not on basis of source but on who are the beneficiary and the nature of the goods

Standard 5

P National legislation shall enumerate the cases in which prior authorization is required for relief from import duties and taxes and specify the authorities empowered to grant such authorization Such cases shall be as few as possible

N Examples of this are exemptions granted by the Board of Investment under the Export Incentives and the Investment Incentive Acts While these laws provide the general basis for the relief availments against the general incentive must be authorized per shipment prior to release by Customs to insure there is no abuse of the relief or of the exemption

Specific Annex C Exportation

Strategy

bull Accept Annex C bull Immediately identify with EDC and PhilExport export commodities that needs the

facilitation of Recommended Practice 2 bull Amend PD 930 to allow use of Commercial Invoice following the standards under

international conventions such as the UNECE Invoice Layout Key (see attach) as alternative exports goods declaration In some respects this alternative document even better describes the exported goods and particulars

bull Develop a system and issue regulations allowing use of this standard commercial invoice

Chapter 1 Outright exportation Evidence of arrival at destination Standard 3

P The Customs shall not require evidence of the arrival of the goods abroad as a matter of course

N Only when Customs is in doubt or for high risk export is such an evidence required

95

Specific Annex D Customs Warehouses and Free Zones

G The scope of this procedure may not cover only imported goods For example some administrations allow goods that are liable to or have borne internal duties and taxes (whether of national origin or previously imported against payment of import duties and taxes) to be stored in a Customs warehouse in order that they may qualify for exemption from or repayment of such internal duties and taxes Thus the definition of the term Customs warehousing procedure covers the warehousing of imported goods since this is the use generally authorized but the storage of goods of national origin is recommended as an additional case of the use of Customs warehouses (See also Recommended Practice 9) Similarly the deposit in a Customs warehouse of goods that have previously been dealt with under another Customs procedure such as temporary admission with a view to subsequent exportation or other authorized disposal is also possible

N Section 1901-1908 of the TCCP provides the legal basis for the warehousing of imported goods to achieve the objectives of this Annex However the expanded use of the facility to goods of national origin as well as those previously dealt with under previous regimes is not supported by the TCCP

Strategy

bull Accept Annex D1 bull Enter Reservations on following Standard 2 and RPs 5 7 8 9 11 12 bull Issue implementing regulations on Standard 10

Chapter 1 Customs warehouses


P National legislation shall provide for Customs warehouses to be used solely by specified persons (Private Customs warehouses) when this is necessary to meet the special requirements of the trade

N Historically and under existing legislation private bonded warehouses were allowed for manufacturing facilities catering to the domestic market


P The Customs shall lay down the requirements for the establishment suitability and management of the Customs warehouses and the arrangements for Customs control The arrangements for storage of goods in Customs warehouses and for stock-keeping and accounting shall be subject to the approval of the Customs

N The implementing regulations to Sections 1900-08 clearly defined all these requirements and arrangements

96


P The Customs shall specify the kinds of goods which may be admitted to private Customs warehouses

N In determining if the applicant should be extended the use of the facility the kinds of goods allowable to be stored therein is normally verified against the business of the applicant Only raw materials for the manufacture of goods for the domestic market are allowed


P Goods deteriorated or spoiled by accident or force majeure while under the Customs warehouse procedure shall be allowed to be declared for home use as if they had been imported in their deteriorated or spoiled state provided that such deterioration or spoilage is duly established to the satisfaction of the Customs

N Section 1704 allows abatement among others while the goods remain in customs custody after unlading Warehouse goods remain under customs custody

Removal of goods Standard 14

P Any person entitled to dispose of the goods shall be authorized to remove all or part of them from one Customs warehouse to another or to place them under another Customs procedure subject to compliance with the conditions and formalities applicable in each case

N Allowable Standard 15

P National legislation shall specify the procedure to be followed where goods are not removed from the Customs warehouse within the period laid down

N Section 1908 Closure of a Customs warehouses Standard 16

P In the event of the closure of a Customs warehouse the persons concerned shall be given sufficient time to remove their goods to another Customs warehouse or to place them under another Customs procedure subject to compliance with the conditions and formalities applicable

N Section 1905

97

Chapter 2 Free Zones

G bull Accept Chapter D2 bull

As defined in the RKC FREE ZONE means a part of the territory of a Contracting Party where any goods introduced are generally regarded insofar as import duties and taxes are concerned as being outside the Customs territory

bull RA 7916 provides for free trade zone to be operated and managed as separate

customs territory bull Therefore the RKC standards and recommended practices must be incorporated

in the IRRs of free trade zone charters Establishment and control Standard 2

P National legislation shall specify the requirements relating to the establishment of free zones the kinds of goods admissible to such zones and the nature of the operations to which goods may be subjected in them

N RA 7916 Parts II III and X of the IRR Admission of goods Standard 5

P Admission to a free zone shall be authorized not only for goods imported directly from abroad but also for goods brought from the Customs territory of the Contracting Party concerned

N Section 4 Part V of IRR Recommended Practice 6

P Admission to a free zone of goods brought from abroad should not be refused solely on the grounds that the goods are liable to prohibitions or restrictions other than those imposed on grounds of bull Public morality or order public security public hygiene or health or for

veterinary or phytosanitary considerations or bull The protection of patents trade marks and copyrights irrespective of country

of origin country from which arrived or country of destination Goods which constitute a hazard which are likely to affect other goods or whichrequire special installations should be admitted only to free zones specially designed to receive them

N Section 1 Rule X provides that only prohibited merchandise may not be brought to the restricted areas of the ecozones

98

Standard 7

P Goods admissible to a free zone which are entitled to exemption from or repayment of import duties and taxes when exported shall qualify for such exemption or repayment immediately after they have been introduced into the free zone

N bull Deliveries from customs bonded warehouses to free zones like deliveries to other Customs bonded warehouses are considered constructive exports and are therefore entitled exemption from payment of duties and taxes for which the covering security may already be canceled

bull However raw materials already paid duties and taxes on import can not claim refund as the only modes for importing raw materials conditional free are bonded warehousing duty drawback and ecozones

Standard 8

P Goods admissible to a free zone which are entitled to exemption from or repayment of internal duties and taxes when exported shall qualify for such exemption or repayment after they have been introduced into the free zone

N Section 106 A2 (a) of the NIRC is considered deemed exports Security Recommended Practice 10

P The Customs should not require security for the admission of goods to a free zone N No security is required for admission However a chargeable transportation bond is

being required to secure the goods while in transit from the port of entry to the free zone Still legislation may be considered as compliant


P Goods admitted to a free zone shall be allowed to undergo operations necessary for their preservation and usual forms of handling to improve their packaging or marketable quality or to prepare them for shipment such as breaking bulk grouping of packages sorting and grading and repacking

N The generally accepted principle is free movement of goods inside the free zone Customs presence and formalities normally applies only at the borders

Standard 12

P Where the competent authorities allow processing or manufacturing operations in a free zone they shall specify the processing or manufacturing operations to which goods may be subjected in general terms andor in detail in a regulation applicable throughout the free zone or in the authority granted to the enterprise carrying out these operations

N Part I of the IRR to RA7916 among others define the various types of ecozone enterprises and the various activities they may engage into

99


P National legislation shall enumerate the cases in which goods to be consumed inside the free zone may be admitted free of duties and taxes and shall lay down the requirements which must be met

G Standard 13 covers not only goods such as catalysts and accelerators or retarders of chemical reactions which are used in the industrial processing but also goods consumed by people working inside the free zones (office stores fuel food and beverages)

N bull Section 1 Rule VIII Part V of the IRR to RA 7916 extends exemption ldquoprovided they are to be sold stored broken-up repacked assembled manipulated manufactured andor mixed with foreign or domestic merchandise within the restricted areas in the ecozonesrdquo Thus consumption in the PEZA ecozone is not entitled to exemption under the IRR

bull Nonetheless we can construe the IRR has having a zero enumeration and therefore still compliant with this standard

bull At the Subic SEFZ there is no need to enumerate as the facility is a free port Duration of stay Standard 14

P Only in exceptional circumstances shall a time limit be imposed on the duration of the stay of goods in a free zone

N RA 7916 has done away with the period of storage that used to be 2 years Removal of goods Standard 16

P Goods admitted to or produced in a free zone shall be permitted to be removed in part or in full to another free zone or placed under a Customs procedure subject to compliance with the conditions and formalities applicable in each case

N Revised MOA between EPZA and BOC and circularized under CMC 31-84 dated 20 Mar 1984

Standard 17

P The only declaration required for goods on removal from a free zone shall be the Goods declaration normally required for the Customs procedure to which those goods are assigned

N For entry into the Customs territory only goods declaration for the Customs procedure involved is required For farm-out and farm-in other forms are required but these procedures are not removals

100

Assessment of duties and taxes Standard 19

P National legislation shall specify the point in time to be taken into consideration for the purpose of determining the value and quantity of goods which may be taken into home use on removal from a free zone and the rates of the import duties and taxes or internal duties and taxes as the case may be applicable to them

G Between the time when the goods entered the free zone and the time when they are taken into home use changes may occur in the Customs tariff or in the value of the goods or their quantity may decrease through evaporation or other losses It is therefore necessary to specify the point in time to be taken into consideration for the purpose of determining the value and quantity of the goods and the rates of the import duties and taxes applicable

N TCCP sets three conditions when importation is deemed terminated shipment has arrived entry has been made and payments made If import not yet terminated the current tariff rates exchange rates and quantities apply Also entry into the ecozone is considered not having been entered for duty and tax purposes

Standard 20

P National legislation shall specify the rules applicable for determining the amount of the import duties and taxes or internal duties and taxes as the case may be chargeable on goods taken into home use after processing or manufacturing in a free zone

N Section 3 Part V of the IRR to RA 7916 Closure of a free zone Standard 21

P In the event of the closure of a free zone the persons concerned shall be given sufficient time to remove their goods to another free zone or to place them under a Customs procedure subject to compliance with the conditions and formalities applicable in each case

N Section 4 Part XI of IRR

Specific Annex E Transit

G Customs transit means the Customs procedure under which goods are transported under Customs control from one Customs office to another

N The regulations on the movement of goods from one Customs office to another is contained in separate regulations bull CAO 12-77 prescribes the ldquoRules regulations and procedures on the

Transshipment of Imported Cargoes from one port to another in the Philippinesrdquo While this regulation has as subject transshipment the operation covered istransit under the above definition as it involves two customs offices The reason for this is under Philippine Customs terminologies transits are termed as domestic transshipment while transshipments are termed foreign transshipment

bull The movement of shipments from the airport to ecozones is covered under

101

separate orders and so are the movements to the SEZs of Subic and Clark S To provide corresponding ICT systems support under the eCustoms project and

issue consolidated regulations for transits reflecting the various standards and practices of the annex-chapter except for the following for which reservation should be raised

Chapter 1 Customs transit


P Goods being carried under Customs transit shall not be subject to the payment of duties and taxes provided the conditions laid down by the Customs are complied with and that any security required has been furnished

N Section 2101 and 2102 Formalities at the office of departure b Sealing and identification of consignments Standard 8

P The Customs at the office of departure shall take all necessary action to enable the office of destination to identify the consignment and to detect any unauthorized interference

N The transportation unit (container) may be sealed and assigned an escort to avoid and detect unauthorized interference Advisory telegram or an electronic broadcast is sent to the port of destination to help the destination identify the transit cargo


P Subject to the provisions of other international conventions the Customs should not generally require that transport units be approved in advance for the transport of goods under Customs seal

G Unless expressly required by other international agreements approval of the transport-unit is not mandatory for transport under Customs seal Customs shall decide whether the transport-unit is sufficiently secure for Customs transit purposes

Standard 10

P When a consignment is conveyed in a transport-unit and Customs sealing is required the Customs seals shall be affixed to the transport-unit itself provided that the transport-unit is so constructed and equipped that bull Customs seals can be simply and effectively affixed to it bull No goods can be removed from or introduced into the sealed part of the

transport-unit without leaving visible traces of tampering or without breaking the Customs seal

bull It contains no concealed spaces where goods may be hidden and bull All spaces capable of holding goods are readily accessible for Customs

102

inspection bull The Customs shall decide whether transport-units are secure for the purposes of

Customs transit Standard 13

P When the Customs fix a time limit for Custom s transit it shall be sufficient for the purposes of the transit operations

N Legislation does not set a time limit for transits However regulations exist for monitoring transits and aging transits not acknowledged at the port of destination


P At the request of the person concerned and for reasons deemed valid by the Customs the latter should extend any period initially fixed

N Since there is no time limit there is no need to request extension to a time limit It is possible though that a transshipment maybe considered as beyond acceptable time limits and for valid reasons may be given extension

Termination of Customs transit Standard 23

P National legislation shall not in respect of the termination of a Customs transit operation require more than that the goods and the relevant Goods declaration be presented at the office of destination within any time limit fixed without the goods having undergone any change and without having been used and with Customs seals fastenings or identification marks intact

Standard 24

P As soon as the goods are under its control the office of destination shall arrange without delay for the termination of the Customs transit operation after having satisfied itself that all conditions have been met


P Failure to follow a prescribed itinerary or to comply with a prescribed time limit should not entail the collection of any duties and taxes potentially chargeable provided the Customs are satisfied that all other requirements have been met

Chapter 2 Transshipment

G ldquoTransshipmentrdquo means the Customs procedure under which goods are transferred

under Customs control from the importing means of transport to the exporting means of transport within the area of one Customs office which is the office of both importation and exportation The only regulation issued on Transshipment is CMO 22-93 dated 22 June 93 on Supplemental Rules on Transshipments for Foreign

103

The CMO provides the period of stay in port of transshipments the monitoring and control procedures to insure these are taken out of the country within the period prescribed and provides for a supervision fee by customs Many RKC provisions are not covered by this CMO albeit legislation is not inconsistent What must be done is to complete the CMO by including the RKC provision not currently covered except for the following

1 Recommended Practice 6 - to maintain the status quo until a customs ICT system is set in place to allow electronic application monitoring and control of transshipment operations

2 Recommended Practice 9 - no provision for application for extension Overstaying are subjected to close supervision and control including supervision fee

Principles Standard 2

P Goods admitted to transshipment shall not be subject to the payment of duties and taxes provided the conditions laid down by the Customs are complied with


P Transshipment should not be refused solely on the grounds of the country of origin of the goods the country from which they arrived or their country of destination

Admission to transshipment a Declaration Standard 4

P Only one Goods declaration shall be required for the purposes of transshipment Standard 5

P Any commercial or transport document setting out clearly the necessary particulars shall be accepted as the descriptive part of the Goods declaration for transshipment and this acceptance shall be noted on the document


P The Customs should accept as the Goods declaration for transshipment any commercial or transport document for the consignment concerned which meets all the Customs requirements This acceptance should be noted on the document

104


P When the Customs consider it necessary they shall take action at importation to ensure that the goods to be transshipped will be identifiable at exportation and that unauthorized interference will be readily detectable

c Additional control measures Standard 8

P When the Customs fix a time limit for the exportation of goods declared for transshipment it shall be sufficient for the purposes of transshipment

N Now 30 calendar days maximum which is more than sufficient as borne by experience



N No provision for extension However these overstaying transshipments are subjected to differential monitoring


P Failure to comply with a prescribed time limit should not entail the collection of any duties and taxes potentially chargeable provided the Customs is satisfied that all other requirements have been met

N The CMO only requires transfer to a designated area for overstaying transshipments their inspection and close supervision and the collection of supervision fees

Chapter 3 Carriage of goods coastwise

Coverage Chapter 3 of Specific Annex E deals with the carriage coastwise of

1 goods in free circulation 2 imported goods that have not been declared and which are transported in a vessel other

than the importing vessel in which they arrived in the Customs territory In Philippine Customs parlance this is termed domestic transhipment which is local transit with a change of carrier


P The Customs shall allow goods to be transported under the carriage of goods coastwise procedure on board a vessel carrying other goods at the same time provided that they are satisfied that the goods can be identified and other

105

requirements will be met N The country being made up of over 7000 islands and with only 36 ports open to

international trade transporting imported goods to their final destination from their port of introduction from foreign would entail domestic transhipment thru domestic carriers carrying mostly goods in free circulation Domestic transhipment involves delivery of goods to the master of a domestic carrier who will have responsibility to present the same to the Customs office at destination together with the transit manifest


P The Customs should require goods in free circulation being transported under the carriage of goods coastwise procedure to be segregated from other goods carried on board the vessel only when they consider it to be necessary for control purposes

N Customs regulations on domestic transhipment do not even require segregation of transhipment containers from free goods in the vessel

Loading and unloading Standard 7

P National legislation shall specify the places which are approved for the loading and unloading of goods under the carriage of goods coastwise procedure and the times during which loading and unloading may be carried out

N Destination ports for domestic transhipment can only be any of the designated ports of entry where a customs office operates Port of entry or not however the hours for loading and unloading are determined by the port authorities and issued as local port regulations


P When a vessel transporting goods under the carriage of goods coastwise procedure is diverted during the voyage the Customs should at the request of the person concerned allow such goods to be unloaded under the procedure at a place other than that originally intended Any expenses chargeable shall be limited to the approximate cost of the services rendered

N Para 1 Section III of CAO 12-77 Documentation Recommended Practice 14

P The Customs should grant a general authorization to convey goods under the carriage of goods coastwise procedure for vessels which trade regularly between specified ports

N Unless Customs issues specific disqualification to a transportation company any carrier with the required carrier bond can regularly accept domestic transhipment

106

Specific Annex F Processing Coverage of the Procedure Inward processing - the Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved from payment of import duties and taxes on the basis that such goods are intended for manufacturing processing or repair and subsequent exportation Compensating product - the products resulting from the manufacturing processing or repair of goods for which the use of the inward processing procedure is authorized Equivalent goods - domestic or imported goods identical in description quality and technical characteristics to those imported for inward processing which they replace Current Status of Compliance Sections 2001-2004 of the TCCP on Manufacturing Bonded Warehouses provide the legal basis for the conduct of mainstream inward processing in the country A person intending to regularly undertake inward processing may apply a license for his manufacturingprocessing facility as a Customs Manufacturing Bonded Warehouse (CMBW) CAO 2-91 and CMO 31-91 are the customs issuances implementing Sections 2001-04 of the TCCP Many inward processing situations cannot be addressed by Section 2001-04 of the TCCP and its implementing regulations The regulations on the operations of Common Bonded Warehouses partly address the requirements of small companies Currently there are 10 common garments Bonded Warehouses and 10 miscellaneous Common Bonded Warehouses which have hundreds of members called subcontractors However a moratorium on the establishment of more common warehouses had been issued after the discovery of massive abuses of the facilities Section 105-d of the TCCP has also been used as a basis for inward processing It provides that ldquoArticles brought into the Philippines for repair processing or reconditioning to be re-exported upon completion of the repair processing or reconditioningupon giving of a bond in an amount equal to one-and -a half times the ascertained duties and taxes However the regulations implementing the processing provision of the TCCP which is CAO 3-78 has been revoked after discovery of abuses Therefore the breadth of inward processing conceived in this Specific Annex of RKC is not completely supported by current legislation Inward processing as conceived in the RKC does not require the intermediation of CMBWs (regular or common) nor is it a requirement that the importer and the processor be one and the same person Also unsupported is termination of the process with equivalent goods rather than the goods imported Proposed Strategy of Compliance ndash Accept this Specific Annex but enter reservations as indicated in the following gap analysis

Chapter 1 Inward processing


P Goods admitted for inward processing shall be afforded total conditional relief from import duties and taxes However import duties and taxes may be collected on any products including waste deriving from the processing or manufacturing of goods admitted for inward processing that are not exported or treated in such a way as to

107

render them commercially valueless N Sections 2001-04 of TCCP as implemented by CAO 2-91 and CMO 31-91 Section

105-d of TCCP Recommended Practice 4

P Inward processing should not be refused solely on the grounds of the country of origin of the goods the country from which arrived or the country of destination

N Legislation is silent Should be included in a general announcement following accession to the Convention

Standard 5

P The right to import goods for inward processing shall not be limited to the owner of the imported goods

G Inward processing covers not only typical inward processing where the importer is the owner of the goods but also contract or job processing in which the foreign customer remains the owner of the imported goods and the actual importer only processes the goods under contract with the (foreign) owner

N Under the manufacturing bonded warehousing operations the goods may just be consigned to the local manufacturer


P When in the execution of a contract entered into with a person established abroad the goods to be used are supplied by that person inward processing should not be refused on the grounds that goods identical in description quality and technical characteristics are available in the Customs territory of importation

N The Customs Code and the implementing ordersregulations do not contain provisions inconsistent with this R-Practice The requirement that imported raw materials not be locally available (quality quantity and price) is for the grant of incentives under the Exports Incentives Act and the Omnibus Investment Code and not for availment of Inward Processing Therefore national legislation is compliant

Placing goods under inward processing a Authorization for inward processing Standard 8

P National legislation shall specify the circumstances in which prior authorization is required for inward processing and the authorities empowered to grant such authorization

N Section 2001 of TCCP CAO 2-91 and CMO 39-91 always require prior authorization for inward processing

Standard 9

P The inward processing authorization shall specify the manner in which operations permitted under inward processing shall be carried out

108

N This matter is spelled out in the application for the operation of a CBMW the authorization and the general provisions of the legislation


P Persons who carry out regular inward processing operations should on request be granted a general authorization covering such operations

N Regular inward processing (rather than adhoc inward or situational) would have to avail of the facilities of a CMBW (either regular or common) As previously stated use of section 105d has already been discontinued

Standard 12

P Where goods admitted for inward processing are to undergo manufacturing or processing the competent authorities shall fix or agree to the rate of yield of the operation by reference to the actual conditions under which it is effected The description quality and quantity of the various compensating products shall be specified upon fixing or agreeing to that rate

G The rate of yield or the method of determining the rate should be set on the basis ofproduction data and be identifiable in the operators records The rate or method of determining the rate is also subject to retrospective verification by Customs It should be noted that Customs may not be the only authorities concerned in fixing the rate of yield

N While a Formula of Manufacture as verified and certified to by competent government agency is a required supporting document in applying for CMBWs the rate of yield as claimed by the processor is subject to retrospective verification by Customs taking into account actual conditions


P Where the inward processing operations bull Relate to goods whose characteristics remain reasonably constant bull Are customarily carried out under clearly defined technical conditions and bull Give compensating products of constant quality

The competent authorities should lay down standard rates of yield applicable to the operations

N Formulas of manufacture prescribes standard yields which customs may use in lieu of actual production yields

Stay of the goods in the Customs territory Standard 15

P The Customs shall fix the time limit for inward processing in each case N bull for Sec 2002 nine months extendable for 3 months

bull for Sec 105-D six months

109


P The competent authorities should permit processing operations to be carried out by a person other than the person accorded the facilities for inward processing Transfer of ownership of the goods admitted for inward processing should not be necessary provided that the person accorded the inward processing facilities remains responsible to the Customs for compliance with the conditions set out in the authorization for the entire duration of the operations

N This Recommended Practice is implemented between the Common Bonded Warehouse operator and the subcontractors The warehouse operator is the person accorded inward processing and the one who remains responsible for compliance but the subcontractors are the real owners of the goods and the ones actually undertaking the manufacturingprocessing operations The arrangement in common bonded warehouse operations while not exactly the kind envisioned in this Recommended Practice essentially reflects the principle and achieves the purpose

Termination of inward processing b Other methods of disposal Recommended Practice 23

P National legislation should provide that the amount of import duties and taxes applicable in the case where the compensating products are not exported shall not exceed the amount of import duties and taxes applicable to the imported goods admitted for inward processing

N Sections 2002 and 105d require payment of the corresponding duties and taxes on imported goods not exported

Standard 24

P Provision shall be made for terminating inward processing in respect of goods lost as a consequence of the nature of the goods insofar as the compensating products are exported provided that such loss is duly established to the satisfaction of the Customs

G When the nature or technical characteristics of the imported goods are altered as a result of unforeseeable circumstances or force majeure so that it becomes impossible to obtain the compensating products for which an inward processing authorization has been issued the person concerned should inform the supervising Customs office of what has happened For the discharge calculation the altered goods may be considered as goods that are totally destroyed

N The abatement provision of Section 1704b of TCCP

Chapter 3 Drawback

G bull ldquodrawback procedurerdquo means the Customs procedure which when goods are exported provides for a repayment (total or partial) to be made in respect of the import duties and taxes charged on the goods or on materials contained in them or consumed in their production

bull ldquoequivalent goodsrdquo means domestic or imported goods identical in description

quality and technical characteristics to those under the drawback procedure

110

which they replace bull drawback means the amount of import duties and taxes repaid under the

drawback procedure Field of application Standard 2

P National legislation shall enumerate the cases in which drawback may be claimed N Section 106 (a)-(c)

Payment of drawback Standard 7

P Drawback shall be paid as soon as possible after the claim has been verified N Section 106 (e) provides that claims shall be paid or granted within 60 days after

receipt of the properly accomplished claims

Specific Annex G Temporary Admission Coverage The Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved totally or partially from payment of import duties and taxes such goods must be imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of them The fundamental principle of temporary admission with re-exportation in the same state is to allow under certain conditions the importation of goods into the Customs territory of the country of destination for a specified period without collecting the duties and taxes applicable to those goods Field of application Standard 2

P National legislation shall enumerate the cases in which temporary admission may be granted

N Section 105 B salvage equipments D articles for repair processing or reconditioning G Effects of tourists or travelers G-1 Effects of foreign consultants I Articles for public entertainment display or exposition J Articles of foreign film producers for making or recording motion picture films in the Phils M containers holders and receptacles for particular exports Q Commercial samples

111

Standard 3

P Goods temporarily admitted shall be afforded total conditional relief from import duties and taxes except for those cases where national legislation specifies that relief may be only partial

N Section 105 provides total relief for as long as there is also total re-exportation Standard 4

P Temporary admission shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure

G There seem to be a conflict between the wording of the standard and the guidelines The standard only says ldquoalready placedrdquo The guidelines uses On terminationrdquo

N There is no problem complying with this standard for transits and for goods coming from free ports or free zone However allowing temporary admission after the period of storage which is one interpretation of the phrase in the guidelines ldquoon termination of warehousing is not consistent with Sections 1907 and 1908 which provisions limit withdrawal to consumption transportation to another port for exportation or for delivery on board an international aircraft or vessel Section 1908 provides that articles not withdrawn at the expiration of the prescribed period shall be sold at public auction We should interpret this standard as applicable within the period of storage in the case of goods already entered under warehousing That the phrase ldquoon terminationrdquo means the warehousing procedure must be terminated with the coming into effect of the temporary admission After all guidelines have no legal force and effect

Formalities prior to the granting of temporary admission Standard 7

P National legislation shall enumerate the cases in which prior authorization is required for temporary admission and specify the authorities empowered to grant such authorization Such cases shall be as few as possible

G bull May be obtained from a particular authority either before the goods are introduced into the Customs territory or when the goods are already in temporary store or in a Customs warehouse

bull Need not be sought for each individual consignment of goods but for operations of the same type carried out by the same person over a specified period or for a particular company

bull Customs should endeavor to make the Customs office of entry competent to grant temporary admission to the goods at the time of arrival and to limit as far as possible the cases in which prior authorization is required

N Section 105 subpara b d g g-1i j m and q are the situations under which temporary admission under bond (conditionally free imports) may be allowed In all these cases no prior authorization is required and the Collector of Customs has the prerogative to extend the period within which the goods must be re-exported

112


P The Customs should require that the goods be produced at a particular Customs office only where this will facilitate the temporary admission

N In actual operations customs clearance under temporary admission (conditionally free imports) is undertaken at and by the office at the port of entry Each port of entry has a full complement of examiners that can identify the goods Should there be need for experts to assist in the identification of the goods Customs officials are allowed by law to engage their services

Time limit for re-exportation

Standard 13

P The Customs shall fix the time limit for temporary admission in each case N Section 105 b d g g-1 i j m and q all provide time limits within which re-

exportation in the same state must be made Cases of temporary admission a Total condition relief from import duties and taxes Recommended Practice 22

P Temporary admission with total conditional relief from duties and taxes should be granted to the goods referred to in the following Annexes to the Convention on Temporary Admission (Istanbul Convention) of 26 June 1990

1 Goods for display or use at exhibitions fairs meetings or similar events referred to in Annex B1

2 Professional equipment referred to in Annex B2 3 Containers pallets packings samples and other goods imported in

connection with a commercial operation referred to in Annex B3 4 Goods imported for educational scientific or cultural purposes referred to in

Annex B5 5 Travellers personal effects and goods imported for sports purposes referred

to in Annex B6 6 Tourist publicity material referred to in Annex B7 7 Goods imported as frontier traffic referred to in Annex B8 8 Goods imported for humanitarian purposes referred to in Annex B9 9 Means of transport referred to in Annex C 10 Animals referred to in Annex D

N Total relief is extended under Section 105 of the TCCP for 1 2 3 4 5 6 and 8 above No 7 is not applicable since the Philippines does not have any common land border with any country Means of Transport is strictly speaking not an importation unless circumstance so it is not subject to import duty

113

Specific Annex H Offences Coverage

bull Customs offence means any breach or attempted breach of Customs law bull Administrative Settlement of a Customs offence means the procedure laid down by

national legislation under which the Customs are empowered to settle a Customs offence either by ruling thereon or by means of a compromise settlement

bull Compromise settlement means an agreement under which the Customs being so empowered consent to waive proceedings in respect of a Customs offence subject to compliance with certain conditions by the person(s) implicated in that offence

Overall Strategy

bull The fundamental principles as well as most of the standards and recommended practices in this Annex are already being observed by Philippine Customs

bull It will not subtract but would only add to the quality of observance of the principles and implementation of laws rules and regulations if these are clearly stated in Customs legislation

bull Recommend that there be a part in the Customs Operation Manual to be devoted to customs offenses the opening portions of which should state the principles enunciated in this specific annex


P National legislation shall define Customs offences and specify the conditions under which they may be investigated established and where appropriate dealt with by administrative settlement

N Part 4 Title VI (Sections 2501-2536 on Surcharges Fines and Forfeitures) and Section 27 and 29 RA 8290

Standard 3

P National legislation shall specify which persons can be held responsible in connection with the commission of a Customs offence

N Part 3 Title VII (Penal Provisions 3601-3612) of the TCCP specifies the person responsible the condition under which they are made responsible and the corresponding punishments

Standard 4

P National legislation shall specify a period beyond which proceedings in connection with Customs offences may no longer be taken and shall fix the date from which that period shall run

G For many Customs offences documentary evidence contained in the records ofcompanies can be particularly relevant Therefore a link between the period of limitation and the period in which importers and exporters are obliged to retain their business records is important

N bull Section 1603 on Finality of Liquidation provides that when articles have been entered and passed free of duty or final adjustment of duties made with subsequent delivery such entry and passage free of duty or settlement of duties will after the expiration of one year from the date of final payment of duties in

114

the absence of fraud or protest be final and conclusive upon all parties unless the liquidation of the import entry was merely tentative

bull ACT 3326 ldquoAn Act to Establish Periods of Prescription for Violations Penalized

by Special Acts and Municipal Ordinances and to Provide when Prescription Shall Begin to Runrdquo

Investigation and establishment of Customs offences Standard 5

P National legislation shall specify the conditions under which the Customs are empowered to bull examine goods and means of transport bull require the production of documents or correspondence bull require access to computerized databases bull search persons and premises and bull secure evidence

N Part 1 Title VI (Section 2201-2212) and Part 2 Title VII 2514 3115 and 3516 Section 3503 of the TCCP as implemented by Section IV-B C and D of CAO 4-2004

Standard 7

P The Customs shall not search premises unless they have reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious

N bull Searching of premises is a law enforcement operations CMO 13-94 prohibits customs personnel from engaging in law enforcement operations outside a customs zones without explicit written authorization granted by the Customs Commissioner or by the Deputy Commissioner for Intelligence and Enforcement or by either the Service Chief for Intelligence or for Enforcement

bull In the evaluation of applications for written authorization only operations which

are likely to succeed in the sense that all the evidences for the violation imputed are obtainable and there are no alibis or defenses which cannot be overcome shall be approved

Standard 8

P The Customs shall inform the person concerned as soon as possible of the nature of the alleged offence the legal provisions that may have been contravened and as appropriate the possible penalties

N Most instances of customs offenses starts with the seizure of goods A recommendation for the issuance of a Warrant of Seizure and Detention is made by the apprehending officer to the Collector of the Port describing the nature and extent of the offense and the specific provision of the Customs Code mandating seizure The person (offender) is served the warrant together with a copy of the seizure recommendation Pending the setting of the hearing date the goods are placed under hold order and transferred to a security warehouse As the liability for the forfeiture of the goods is being heard the apprehending officers undertake further investigation to ascertain if there is any criminal liability punishable

115

under Part 3 Title VII of the Customs Code as well as of the Revised Penal Code and who should be held criminally liable Evidence will have to be gathered to prove that the person(s) have committed the punishable acts on the goodsrdquo knowing the same to have been imported contrary to lawrdquo In all cases subpoena duces tecum and ad testificadum in issued which represents compliance to the principles of this StandardSection 2301 2303 and 2304 TCC


P National legislation shall specify the procedure to be followed by the Customs after it has been discovered that a Customs offence has occurred and the measures they may take

G The intention of this provision is to protect the alleged offender as well as Customs in ensuring that all the technicalities involved have been complied with in accordance with the law Such procedures address the seizure of goods detention of persons and goods search of persons goods and premises arrest and bail first information report etc In some countries these procedures are established in a general code relating to criminal procedure

N There are a number of Customs Administrative and Memorandum Orders issued to achieve the intention of this RKC Standard bull CAO 09-93- Governing the Issuance of WSDs the Conduct of Seizure

Proceedings and Procedures in Appeals bull CA0 02-93- Appreciation of documents executed by foreign based witnesses

in seizure and forfeiture proceedings bull CMO 47-90- Preparation and Disposition of Apprehension Reports and WSDs bull CMO 29-97- Mandatory Service of Notices of Orders Decisions and Other

Proceedings in all Seizure and Forfeiture cases bull Others CAO 04-94 CMOs 10-99 07-91

Seizure or detention of the goods or means of transport Standard 11

P The Customs shall seize goods andor means of transport only when bull they are liable to forfeiture or confiscation or bull they may be required to be produced as evidence at some later stage in the

procedure N Seizure of the carrier or means of transport is undertaken when it can be shown it

was used in the commission of the offense and that it is not a common carrier Section 2530 2531 2532 2533 and 2534

Standard 12

P If a Customs offence relates only to part of a consignment only that part shall be seized or detained provided that the Customs are satisfied that the remainder of the consignment did not serve directly or indirectly in the commission of the offence

116

N Grounds for seizure are clearly defined Those without offense may still be seized provided it can be shown that they were used as a means for the commission of the offense as for example to conceal the misdeclared or undeclared goods

Standard 13

P When the Customs seize or detain goods andor means of transport they shall furnish the person concerned with a document showing bull the description and quantity of the goods and means of transport seized or

detained bull the reason for the seizure or detention and bull the nature of the offence

N Sections 2301 2304 2305 and 2306 TCCP Recommended Practice 14

P The Customs should release seized or detained goods against adequate security provided that the goods are not subject to any prohibitions or restrictions or needed as evidence at some later stage in the procedure

N Section 2301 Recommended Practice 16

P Means of transport should only be forfeited or confiscated where bull the owner operator or person in charge was at the time a consenting party or

privy to the Customs offence or had not taken all reasonable steps to prevent the commission of the offence or

bull the means of transport has been specially constructed adapted or altered or fitted in any manner for the purpose of concealing goods or

bull restoration of the means of transport which has been specially altered or adapted is not possible

N Section 2531 provides that the forfeiture of the vehicle vessel or aircraft shall not be effected if it is established that the owner thereof or his agent in charge of the means of conveyance has no knowledge of or participation in the unlawful act


P Unless they are likely to deteriorate quickly or it would due to their nature be impracticable for the Customs to store them seized or detained goods should not be sold or otherwise disposed of by the Customs before they have been definitively condemned as forfeited or confiscated or have been abandoned to the Revenue

N Section 2601 (d) provides that seized property shall be disposed of after liability to sale shall have been established by proper administrative or judicial proceedings in conformity with the provision of the Code Exceptions are certain goods provided for under Section 2607

117

Detention of persons Standard 18

P National legislation shall specify the powers of the Customs in connection with detention of persons and shall lay down the conditions therefore in particular the period after which detention becomes subject to a review by a judicial authority

N The TCCP clothes Customs officers with police powers including power to arrest The period within which Customs may detain arrested persons and charged them before a fiscal is set under the penal laws

Administrative settlement of Customs offences Recommended Practice 20

P Where during clearance of the goods a Customs offence has been discovered which is regarded as of minor importance it should be possible for the offence to be settled by the Customs office which discovers it

N The TCCP provides that the offense be above a threshold for the goods to be liable for seizure A less than 10 discrepancy between the declaration and the actual findings would entail only the payment of additional duties and taxes A 10-19 discrepancy is subject to a one time fine while a 20-29 discrepancy is punished with a two times fine It is only when the discrepancy is 30 or more and when the goods are not declared that there is prima facie evidence of fraud making the shipment liable for seizure and the person liable for criminal prosecution All of the above action is managed by the discovering unit

Standard 22

P National legislation shall lay down the penalties applicable to each category of Customs offence that can be dealt with by administrative settlement and shall designate the Customs offices competent to apply them

N bull Prohibited imports are not allowable for the administrative remedies bull Regulated goods under seizure may be extended these remedies for as long as

the required clearances permits or authorizations are first obtained bull Collectors of Customs decide on seizure cases However any decision

unfavorable to the government requires automatic review by higher authoritiesCMO 4-94 - Schedule of Fines for Admin Settlement

bull CMO 34-2002 - Guidelines for Imposition of Fines Standard 23

P The severity or the amount of any penalties applied in an administrative settlement of a Customs offence shall depend upon the seriousness or importance of the Customs offence committed and the record of the person concerned in his dealings with the Customs

N bull Surcharges under Section 2503 of the TCCP (none vs 1x vs 2x) depends on the percentage discrepancy

bull All undeclared items are liable for seizure and when these undeclared items as a percentage of the total shipment in terms (volume value) is the majority the whole shipment is liable for seizure as well

118

Standard 24

P Where untrue particulars are furnished in a Goods declaration and the declarant can show that all reasonable steps had been taken to provide accurate and correct information the Customs shall take that factor into account in considering the imposition of any penalty

N This is consistent with national legislation and practice but the determination of this is the subject matter of the seizure proceedings (if goods are issued WSD) or during appeal for the non-imposition of penalty

Standard 26

P Goods that have been seized or detained or the proceeds from the sale of such goods after deduction of any duties and taxes and all other charges and expenses incurred shall be bull turned over to the person entitled to receive them as soon as possible after

the Customs offence has been definitively settled or bull when this is not possible held at their disposal for a specified period bull provided that the goods have neither been condemned as forfeited or

confiscated nor abandoned to the Revenue as a result of a settlement N While any Customs administration makes this as an objective legislation is silent

except for the provision of standard times for processing claims Section 2606 TCCP


P Any person implicated in a Customs offence that is the subject of an administrative settlement shall have the right of appeal to an authority independent of the Customs unless he has chosen to accept the compromise settlement

N bull Decisions of the Customs maybe appealed to the Secretary of Finance and to then to the Court of Tax Appeals

bull Section 2402 TCCP bull RA 9282 ndash Expanded Jurisdiction of CTA

Specific Annex J Special Procedures

Background There are many tourist spots in the country that can be opened to direct callsvisits by foreigners traveling on their private yachts and aircrafts National legislation must provide for the handling of these modes of transport by travelers Strategy

bull Accept Annex J1 bull Accede to the Customs Convention on ATA CARNET as well as the Istanbul Convention

to facilitate as well as secure the cross border flow of goods such as pleasure yachts and aircrafts Another is the New Convention on Pleasure Yachts and aircraft

119

bull Pending accession the international temporary admission forms such as the Carnet de Passage de Douanne prescribed in the conventions may already be recognized and use for the clearance of pleasure yacht and aircraft

bull Enter reservation on Recommended Practice s 9 and 14 bull Develop systems and issue regulations for 15 23 27 29 31 37 and 37 bull Amend law for 16 and 17

Chapter 1 Travellers


P The Customs facilities provided for in this Chapter shall apply to travellers irrespective of their citizenshipnationality

N Legislation is silent but observed in practice This principle should be clearly provided for in legislation thru a general announcement

C-3 S-4

Standard 3

P The Customs shall designate the Customs offices at which Customs formalities relating to travelers may be accomplished In determining the competence and location of these offices and their hours of business the Customs shall take into account in particular the geographical situation and existing volumes of passenger traffic

N Section 701 of the TCCP empowers the President on recommendation of the Commissioner of Customs and the Minister of Finance to open international ports of entries through which travelers may go through for customs formalities In addition Section 606 empowers the President to subject premises to the jurisdiction of the Bureau of Customs


P The dual-channel system should be used for the Customs control of travelers and the clearance of goods carried by them and where appropriate their means of transport for private use

N Customs has a regulation and actually being implemented for greenlane channel (as against the regular of red lane)


P Regardless of the mode of transport used a separate list of travelers or of theiraccompanying baggage should not be required for Customs purposes

G The ldquoseparate listsrdquo referred in this Recommended Practice refers to a Customs form for passenger manifests as against the passenger manifest regularly prepared by transportation companies or carriers A separate Customs manifests is considered to be of questionable value and the preparation and lodgement of which would impose an unreasonable administrative burden on airlines shipping companies etc Therefore this Recommended Practice provides that if required a passenger list

120

from the carriers normal records should be accepted N Passenger Manifest and Crew List are still being required by BOC However no

separate customs form is prescribed since a printout or file transfer from thetransportation companys system would suffice BOC has been obtaining passenger manifest from SITA


P The Customs in co-operation with other agencies and the trade should seek to use internationally standardized advance passenger information where available in order to facilitate the Customs control of travelers and the clearance of goods carried by them

N BOC has obtained passenger and goods manifest with SITA Standard 10

P Personal searches of travelers for the purposes of Customs control shall be carried out only in exceptional cases and when there are reasonable grounds to suspect smuggling or other offences

N In addition to the dual processing of passenger personal or body searches are done only on information or when there is compelling reason for doing so

Standard 11

P Goods carried by travelers shall be stored or kept subject to the conditions prescribed by the Customs pending clearance under the appropriate Customs procedure re-exportation or other disposal in accordance with national legislation in the following cases bull At the travelerrsquos request bull When the goods concerned cannot be cleared immediately or bull Where the other provisions of this Chapter do not apply to such goods

N At the airport there is a storage facility called in-bond that responds to the situations described in this Standard

Standard 12

P Unaccompanied baggage (ie baggage arriving or leaving before or after the traveller) shall be cleared under the procedure applicable to accompanied baggage or under another simplified Customs procedure

N Unaccompanied baggage (as against mishandled baggage that is checked in by the passenger) is issued by the transportation company with an airway bill or bill of lading It is cleared under a different procedure from accompanied baggage (which only needs a baggage declaration) Provided the contents are personal belongings and effects normally accompanying travelers a simplified procedure using informal entry is observed

121

Standard 13

P Any authorized person shall be allowed to present unaccompanied baggage for clearance on behalf of the traveler

N Section1301 of the Customs Code as amended by RA 9280 allows the use of third parties for the clearance of a travellerrsquos unaccompanied goods

Entry Standard 18

P Returning residents shall be permitted to re-import free of import duties and taxes personal effects and their means of transport for private use which they took with them at the time of their departure from the country and which were in free circulation in that country

N Resident must however take measures to present to Customs on exportation to facilitate re-importation

Standard 19

P The Customs shall not require a Customs document or security for the temporary admission of personal effects of non-residents unless bull they exceed in value or quantity the limits laid down in national legislation or bull they are deemed by the Customs to be a risk to the Revenue

N For accompanied goods of travelers no document other than the passenger declaration on arrival is required

Standard 20

P In addition to clothing toilet articles and other articles obviously of a personal nature the following shall in particular be considered to be non-residents personal effects bull Personal jewellery bull Still and motion picture cameras together with a reasonable supply of films

tapes and accessories therefore bull Portable slide or film projectors and accessories therefore together with a

reasonable quantity of slides or films bull Binoculars bull Portable musical instruments bull Portable sound reproduction devices including tape recorders compact disc

players and dictating machines with tapes records and discs bull Portable radio receivers bull Cellular or mobile telephones bull Portable television sets bull Portable typewriters bull Portable personal computers and accessories bull Portable calculators bull Baby carriages and strollers bull Wheelchairs for invalids bull Sporting equipment

122

N Section 105-G is broad enough to cover the above enumerated items Standard 21

P Where it is necessary to lodge a temporary admission declaration for non-residents personal effects the time limit for temporary admission shall be fixed by reference to the length of the travellers stay in the country provided that any limit laid down in national legislation is not exceeded

N Section 105-G provides for a 3-months period for re-exportation and subject to guarantees

Standard 22

P At the request of the traveller and for reasons deemed valid by the Customs the latter shall extend the period of temporary admission initially fixed for a non-residentrsquo s personal effects provided that any limit laid down in national legislation is not exceeded

N Extendible by 3-months Standard 23

P Non-residents shall be granted temporary admission in respect of their means of transport for private use

N Yachts and planes of private persons are placed under guards while in a place subject to customs control and placed under bond if use outside

Standard 30

P Any replacement parts required for the repair of a means of transport for private use temporarily in the country shall be granted temporary admission

N Conditionally Free Re-exportation Standard 32

P The Customs shall not require the re-exportation of non-residents means of transport for private use or personal effects which have been seriously damaged or destroyed through accident or force majeure

N May be (1) expressly abandoned to be disposed of in accordance with law (2) entered for home use with the damage considered for valuation purposes


P The Customs formalities applicable to departing travelers shall be as simple as possible

N Customs essentially just observe the scanning machines operated by the airport

123

authorities and only searches the baggage if there are compelling reasons to do so Standard 34

P Travelers shall be permitted to export goods for commercial purposes subject to compliance with the necessary formalities and payment of any export duties and taxes chargeable

N There are no restrictions for travellers to export but they need to comply with export procedures like residents

Standard 35

P At the request of residents leaving the country the Customs shall take identification measures for certain articles when it will facilitate the re-importation free of duties and taxes

N At the request of a departing traveler who is taking out certain personal effects that may be questioned upon return such as jewelries Customs may inspect the goods and issue a certificate of identification

Standard 36

P Only in exceptional cases shall the Customs require a temporary exportation document for the personal effects and means of transport for private use of residents leaving the country

N Personal effects of departing travelers are not required to be declared with Customs But for the benefit of the traveler who may have difficulty later convincing customs officers that the goods accompanying him on return are the same ones brought out Customs will advise him to get certificate of identification but not temporary export


P Transit passengers who do not leave the transit area shall not be required to pass through any Customs control However the Customs shall be allowed to maintain general surveillance of transit areas and to take any action necessary when a Customs offence is suspected

N This is being observed at the countrys airports but there is no legislation spelling this out

Chapter 2 Postal traffic


P National legislation shall specify the respective responsibilities and obligations of the Customs and of the postal service in connection with the Customs treatment of postal items

124

N There is a MOA between Customs and Post but this needs amendment The 1973 MOA was made between the Bureau of Customs and the Bureau of Post which is now the Philippine Postal Corporation which is a different legal entity

Clearance of postal items b Production to the Customs Standard 6

P The Customs shall designate to the postal service the postal items which shall be produced to them for the purposes of Customs control and the methods of production of these items

N Under the Customs and Postal Service Agreement parcel posts are segregated from mail at a designated area Customs officers designate those to be examined from those that may already be cleared by the postal authorities Upon inspection and assessment by Customs the parcels are forwarded to the postal stations concerned where the goods are released upon payment of the assessment

Standard 7

P The Customs shall not require postal items to be produced to them at exportation for the purposes of Customs control unless they contain bull goods the exportation of which must be certified bull goods which are subject to export prohibitions or restrictions or to export duties

and taxes bull goods having a value exceeding an amount specified in national legislation or bull goods which are selected for Customs control on a selective or random basis

N Customs - Only the required documents are presented and its up to Customs to require physical presentation of the export goods


P The Customs should not as a general rule require the following categories of imported postal items to be produced to them

1 postcards and letters containing personal messages only 2 literature for the blind 3 printed papers not subject to import duties and taxes

N As with Standard 6 Customs selects the ones subject for verification

Chapter 3 Means of transport for commercial use Chapter 3 of Annex J deals with the temporary admission procedures of means for commercial transport of goods Temporary admission means the Customs procedure under which vehicles vessels or aircrafts may be introduced into a Customs territory conditionally relieved from payment of import duties and taxes The archipelagic geography of the country extremely limits the situations for operators of means of transport to avail of temporary admissions unlike in countries with common land borders where means of

125

transport under multilateral or bilateral arrangements may move within the territory of countries other than the country of registration of the means of transport In the case of tourism or exhibition ships calling at different ports in the country the usual control mechanism is for customs officers to be assigned on board for the duration of the transportations stay in country Temporary admission of means of transport for commercial use Recommended Practice 3

P Means of transport for commercial use whether loaded or not should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes provided that such means of transport for commercial use are not used for internal transport in the Customs territory of the country of temporary admission They must be intended for re-exportation without having undergone any change except normal depreciation due to their use normal consumption of lubricants and fuel and necessary repairs

N Section 100 of the TCCP states that only importations are subject to duty while Section 107 of then NIRC subjects importation to VAT Modes of transport are not considered importation and therefore neither subject to duty or VAT

Standard 4

P The Customs shall require security or a temporary admission document for means of transport for commercial use duly registered abroad only when they consider it essential for the purposes of Customs control

N Means of transport not being importations nor subject to duty tax are not subject to security However when there is a risk of these becoming importations as when they have to stay in the country for valid reasons beyond the normal duration for transporting goods as when these have to undergo emergency repairs or work in a place outside of customs control then the Customs authority may impose a security required on conditionally free imports for repairs or processing

Standard 5

P Where the Customs fix a time limit for the re-exportation of means of transport for commercial use they shall take into account all the circumstances of the transport operations intended

N There is no legislation covering security for means of transport Its when they become temporary importation that they are required security which under existing law have fixed period for re-export but which in practice may be granted extension



N When means of transport become temporary importation they are required security which under existing law have fixed period for re-export but which in practice may be granted extension

126

Temporary admission of parts and equipment Recommended Practice 7

P Special equipment for the loading unloading handling and protection of cargo whether or not it is capable of being used separately from the means of transport for commercial use which is imported with the means of transport for commercial use and is intended to be re-exported therewith should be allowed to be brought temporarily into a Customs territory conditionally relieved from payment of import duties and taxes

N Ships gears are considered part of the means of transport and are not considered articles of importation under Section 100 of the TCCP and Section 107 of the NIRC


P Parts and equipment which are to be used in the course of repair or maintenance as replacements for parts and equipment incorporated in or used on a means of transport for commercial use already temporarily imported in a Customs territory should be allowed to be brought temporarily into that territory conditionally relieved from payment of import duties and taxes

N Section 105 (w) of the TCCP Arrival Standard 9

P When a declaration of arrival is required to be lodged with the Customs on arrival of means of transport for commercial use the particulars required to be given thereon shall be limited to the minimum necessary to ensure compliance with Customs law

N bull The declaration of arrival for aircraft engaged in foreign trade is the General Declaration (a document governed by ICAO) Section 1105 of the TCCP lists the data to be provided in the General Declaration

bull For maritime transport the Customs Code does not have a general declaration However a comparison of the documents required for submission on arrival and the data elements thereof (manifest storage plan store list crew list and passenger list) shows these to be practically identical Notwithstanding in practice a General Declaration is required of maritime vessels maybe to align the procedures for sea and air transport

bull A perusal of the data required per the Customs Code show that all these are relevant for proper Customs Control


P Means of transport for commercial use shall be permitted to depart from the Customs territory through a Customs office other than that through which they arrived

N This standard is allowed for as long as entrance and clearance formalities is observed for each port of call and that calls are only made at designated ports of entry

127

Chapter 4 Stores Strategy Accept this Annex and issue CMOs on Ship Stores providing for these except for Recommended Practice 4 which is not applicable Stores on board arriving vessels aircraft or trains a Exemption from import duties and taxes Standard 3

P Stores which are carried in a vessel or aircraft arriving in the Customs territory shall be exempted from import duties and taxes provided that they remain on board


P Stores for consumption necessary for the operation and maintenance of vessels aircraft and trains which are on board these means of transport arriving in the Customs territory shall be exempted from import duties and taxes provided that they remain on board while these means of transport are in the Customs territory

N Stores on International Carriers are considered not entered into the customs territory Supply of stores exempted from duties and taxes Standard 15

P Vessels and aircraft which depart for an ultimate foreign destination shall be entitled to take on board exempted from duties and taxes

a stores in such quantities as the Customs deem reasonable having regard to the number of the passengers and the crew to the length of the voyage or flight and to any quantities of such stores already on board and

b stores for consumption necessary for their operation and maintenance in such quantities as are deemed reasonable for operation and maintenance during the voyage or flight having regard also to any quantities of such stores already on board

N There are rulings recognizing the duty and tax free treatment Provided proper procedures are observed withdrawal from bonded warehouses free is allowed and those already paid may be refunded under drawback

Standard 16

P Replenishment of stores exempted from duties and taxes shall be allowed for vessels and aircraft which have arrived in the Customs territory and which need to replenish their stores for the journey to their final destination in the Customs territory


128

Standard 17

P The Customs shall allow stores for consumption supplied to vessels and aircraft during their stay in the Customs territory to be issued under the same conditions as are applicable in this Chapter to stores for consumption held on board arriving vessels and aircraft

N There are rulings recognizing the duty and tax free treatment Provided proper procedures are observed withdrawal from bonded warehouses free from duties and taxes is allowed and those already paid may be refunded under drawback

Chapter 5 Relief Consignments

Recommendations Accession with reservation on R-4 (In general we observe this but there may be health and quarantine restrictions and there used to be some political restrictions that was observed Need to enter reservation) Issuance of Joint Order among DSWD DOF and BOC

bull mandating the priority treatment of relief goods during the period of the emergency bull calling for the observance of the standards and recommended practices and bull putting in place the enabling systems such as release under simplified goods declaration and

advance clearance bull institution of controls to prevent abuse such as

o Accreditation of Relief Organizations o Duration of the Period of the Emergency within which the special procedures maybe

availed o Procedure and Controls in the transfer from Customs and DSWD o Designation of Warehouses where the goods are to be transferred and processed for

distribution Field of Application Standard 3

P In the case of relief consignments the Customs shall provide for bull lodging of a simplified Goods declaration or of a provisional or incomplete

Goods declaration subject to completion of the declaration within a specified period

bull lodging and registering or checking of the Goods declaration and supporting documents prior to the arrival of the goods and their release upon arrival

bull clearance outside the designated hours of business or away from Customs offices and the waiver of any charges in this respect and

bull examination andor sampling of goods only in exceptional circumstances C-34 There is no legislation providing for goods release based on simplified goods

declaration which can also be lodged and processed ahead of goods arrivalbull There is nothing that expressly prohibits these If BOC allows the System for delivery has either the FIP module or the Informal Entry as the support system

129


P In the case of relief consignments any economic export prohibition or restriction and any export duties or taxes otherwise payable should be waived

N At present there is no export duty Should in future certain goods be subject to export duty then legislation must provide exemption when exported as relief goods


P Relief consignments received as gifts by approved organizations for use by or under the control of such organizations or for distribution free of charge by them or under their control should be admitted free of import duties and taxes and free of economic import prohibitions or restrictions

N Exempted under customs and tax codes

Specific Annex K Origin

Chapter 1 Rules of origin Coverage Country of origin of goods ndash the country in which the goods have been produced or manufactured according to the criteria laid down for the purposes of application of the Customs tariff of quantitative restrictions or of any other measure related to trade Rules of origin ndash the specific provisions developed from principles established by national legislation or international agreements (rdquoorigin criteriardquo) applied by a country to determine the origin of goods Substantial transformation criterion ndash the criterion according to which origin is determined by regarding as the country of origin the country in which the last substantial manufacturing or processing deemed sufficient to give the commodity its essential character has been carried out Areas of Application of Rules of Origin to discriminate between exporting countries in matters of

bull quotas bull preferential tariffs bull anti-dumping actions bull countervailing duty (charged to counter export subsidies) bull compile trade statistics bull ldquomade in rdquo labels attached to products

Overall Strategy Accept Specific Annex K completely since national legislation is already fully compliant with RKC as explained below

bull The Philippines is a signatory to the Agreement Establishing the WTO which together with the Supplemental Agreements have been ratified by the President and concurred to by the Senate One of these agreements which now form part of the law of the land is the WTO Rules of Origin The two main principles governing the origin rules under the WTO are wholly produced or obtained goods and substantial transformation These are likewise the two main principles underlying the RKC origin rules

130

bull The country being a member of ASEAN is a signatory to both AFTA and the ASEAN-China Free Trade Area (ACFTA) As such it is bound by the rules of origin under both agreements which among others provide alternative criteria on substantial transformation including Product Specific Rules The WTO allows certain ldquodeparturesrdquo from the general rules for economic and regional groupings such as the ASEAN


Certification Procedures already reflect all the standards and recommended practices under the RKC rules of origin This plus the fact that the RKC Rules of Origin are aligned with the WTO rules are the basis for concluding that Philippine national legislation on rules of origin are compliant with the RKC

Principle Standard 1

P The rules of origin necessary for the implementation of the measures which the Customs are responsible for applying both at importation and at exportation shall be laid down in accordance with the provisions of this Chapter and insofar as applicable by the provisions in the General Annex

Rules of Origin Standard 2

P Goods produced wholly in a given country shall be taken as originating in that country The following only shall be taken to be produced wholly in a given country bull mineral products extracted from its soil from its territorial waters or from its

sea-bed bull vegetable products harvested or gathered in that country bull live animals born and raised in that country bull products obtained from live animals in that country bull products obtained from hunting or fishing conducted in that country bull products obtained by maritime fishing and other products taken from the sea

by a vessel of that country bull products obtained aboard a factory ship of that country solely from products of

the kind covered by paragraph (f) above bull products extracted from marine soil or subsoil outside that countrys territorial

waters provided that the country has sole rights to work that soil or subsoil bull scrap and waste from manufacturing and processing operations and used

articles collected in that country and fit only for the recovery of raw materials bull goods produced in that country solely from the products referred to in

paragraphs (a) to (i) above N Rule 2 of CEPT Scheme for AFTA


P Where two or more countries have taken part in the production of the goods the origin of the goods should be determined according to the substantial transformation criterion

131


P In applying the substantial transformation criterion use should be made of the International Convention on the Harmonized Commodity Description and Coding System


P Where the substantial transformation criterion is expressed in terms of the ad valorem percentage rule the values to be taken into consideration should be bull for the materials imported the dutiable value at importation or in the case of

materials of undetermined origin the first ascertainable price paid for them in the territory of the country in which manufacture took place

bull for the goods produced either the ex-works price or the price at exportation according to the provisions of national legislation


P Operations which do not contribute or which contribute to only a small extent to the essential characteristics or properties of the goods and in particular operations confined to one or more of those listed below should not be regarded as constituting substantial manufacturing or processing bull operations necessary for the preservation of goods during transportation or

storage bull operations to improve the packaging or the marketable quality of the goods or

to prepare them for shipment such as breaking bulk grouping of packages sorting and grading repacking

bull simple assembly operations bull mixing of goods of different origin provided that the characteristics of the

resulting product are not essentially different from the characteristics of the goods which have been mixed

bull special cases of qualification for origin Special cases of qualification for origin Recommended Practice 7

P Accessories spare parts and tools for use with a machine appliance apparatus or vehicle should be deemed to have the same origin as the machine appliance apparatus or vehicle provided that they are imported and normally sold therewith and correspond in kind and number to the normal equipment thereof


P An unassembled or disassembled article which is imported in more than one consignment because it is not feasible for transport or production reasons to import it in a single consignment should if the importer so requests be treated as one article for the purpose of determining origin

132


P For the purpose of determining origin packings should be deemed to have the same origin as the goods they contain unless the national legislation of the country of importation requires them to be declared separately for tariff purposes in which case their origin should be determined separately from that of the goods


P For the purpose of determining the origin of goods where packings are deemed to have the same origin as the goods account should be taken in particular where a percentage method is applied only of packings in which the goods are ordinarily sold by retail

Standard 11

P For the purpose of determining the origin of goods no account shall be taken of the origin of the energy plant machinery and tools used in the manufacturing or processing of the goods


P Where provisions requiring the direct transport of goods from the country of origin are laid down derogations therefrom should be allowed in particular for geographical reasons (for example in the case of landlocked countries) and in the case of goods which remain under Customs control in third countries (for example in the case of goods displayed at fairs or exhibitions or placed in Customs warehouses)


P Changes in the rules of origin or in the procedures for their application shall enter into force only after sufficient notice has been given to enable the interested persons both in export markets and in supplying countries to take account of the new provisions

Chapter 2 Documentary evidence of origin

Requirement of documentary evidence of origin Recommended Practice 5

P Documentary evidence from the competent authorities of the country of origin should be required only in cases where the Customs of the country of importation have reason to suspect fraud

N A-III of CMO 27-2004

133

Languages to be used Recommended Practice 7

P Certificate of origin forms should be printed in the language(s) selected by the country of exportation and if these languages are neither English nor French also in English or French

N English is an official language and used in the COs Authorities and other bodies empowered to issue certificates of origin Standard 9

P Contracting Parties accepting this Chapter shall indicate either in their notification of acceptance or subsequently the authorities or bodies empowered to issue certificates of origin

N 5-A-III of CMO 27-2004 Recommended Practice 11

P Authorities or bodies empowered to issue certificates of origin should retain for not less than two years the applications for or control copies of the certificates of origin issued by them

N EO 301 dated 26 July 1987 as Circularized under Customs Unnumbered Memo dated January 12 2005 provides keeping of public records for at least 5 years (2 years in active and 3 years archive)


P Provision shall be made for sanctions against any person who prepares or causes to be prepared a document containing false information with a view to obtaining documentary evidence of origin

N Rule 21 on Operational Certification Procedures of CEPT-AFTA on Action Against Fraudulent Acts provide that each member shall be responsible for providing legal sanctions This offense is among those already punishable under the Customs Code and penal laws

Chapter 3 Control of Documentary evidence of origin

Reciprocity Standard 2

P The competent authority of the Contracting Party which has received a request for control need not comply with it if the competent authority of the requesting Contracting Party would be unable to furnish that assistance if the positions were reversed

N Rule 16 of the Operational Certification Procedures of the CEPT AFTA provides non-implementation of preferential rate until action by the exporting countryrsquos competent

134

authority on the request of verification Requests for control Recommended Practice 3

P The Customs administration of a Contracting Party which has accepted this Chapter may request the competent authority of a Contracting Party in whose territory documentary evidence of origin has been established to carry out control of such evidence

a where there are reasonable grounds to doubt the authenticity of the documentb where there are reasonable grounds to doubt the accuracy of the particulars

given therein c on a random basis

N Operational Procedures and CMO 27-2004 Standard 4

P Requests for control on a random basis as provided for in Recommended Practice 3 (c) above shall be identified as such and be kept to the minimum necessary to ensure adequate control

N In Operational Procedures But would be advisable to include in the CMO 27-2004 as well

Standard 5

P Requests for control shall

a specify the reasons for the requesting Customs administrations doubts about the authenticity of the document produced or the accuracy of the particulars given therein unless the control is requested on a random basis

b specify where appropriate the rules of origin applicable to the goods in the country of importation and any additional information requested by that country

c be accompanied by the documentary evidence of origin to be checked or a photocopy thereof and where appropriate any other documents such as invoices correspondence etc that might facilitate control

N Provided for in OCP and CMO 27-2004 Standard 6

P Any competent authority receiving a request for control from a Contracting Party having accepted this Chapter shall reply to the request after having carried out the necessary controls itself or having had the necessary investigations made by other administrative authorities or by bodies authorized for the purpose

N In OCP It is advisable to elaborate in CMO particularly our own procedure for responding to request

135

Standard 7

P An authority receiving a request for control shall answer the questions put by the requesting Customs administration and furnish any other information it may consider relevant


Standard 8

P Replies to requests for control shall be furnished within a prescribed period not exceeding six months If the authority receiving the request cannot reply within six months it shall so inform the requesting Customs administration

N OCP provides for three (3) but we should include in our CMO as well Standard 9

P Requests for control shall be made within a prescribed period which except in special circumstances should not exceed one year commencing with the date on which the document was produced to the Customs office of the Contracting Party making the request

N CMO 27-2004 provides for 6 months Release of the goods Standard 10

P A request for control shall not prevent the release of the goods provided that they are not held to be subject to import prohibitions or restrictions and there is no suspicion of fraud

N In OCP and CMO Difference in duties and taxes payable between with and without preference to be covered by a security

Miscellaneous provisions Standard 11

P Any information communicated in accordance with the provisions of this Chapter shall be treated as confidential and used for Customs purposes only

N In OCP but should be included in CMO as well Standard 12

P The documents needed for control of documentary evidence of origin issued by the competent authorities or authorized bodies shall be retained by them for an adequate period which should not be less than two years following the date on which the documentary evidence was issued

N Philippine law requires retention for 5 years (2 years active and 3 years archived)

136

Standard 13

P The Contracting Parties that accept this Chapter shall specify the authorities which are competent to receive requests for control and communicate their address to the Secretary General of the Council who will transmit such information to the other Contracting Parties having accepted this Chapter

N In OCP but advisable to issue CMOs as well

137

Annex D

Specific Annex Gap Analysis Non-Compliant Provisions Specific Annex Gap Analysis Non-Compliant Provisions LEGEND


1a 1b 2 3 4 5


S 1 2 3 4 5

Strategies for Compliance Amendment Law or Pass New Law Issue Department Order or a CAO to amend existing ones Develop implementing System andor reflect in the manual of operations which must be issued as a regulation Particularly highlight in the proposed executive order on the general announcement of RKC accession to clearly demonstrate compliance Issue Reservation

Specific Annex A Arrival of goods in a customs territory Chapter 1 Formalities prior to the lodgement of the Goods Declaration

Production of goods to the Customs a Documentation

Standard 8 Recommended Practice 9 Recommended Practice 10 Recommended Practice 12

Chapter 2 Temporary storage of goods Documentation

Recommended Practice 5 Authorized operations


Duration of temporary storage Recommended Practice 10

o Specific Annex B Importation Chapter 3 Relief from import duties and taxes

Field of application Recommended Practice 6 Recommended Practice 7

o Specific Annex C Exportation Strategy

138

Chapter 1 Outright exportation Documentation

Recommended Practice 2 o Specific Annex D Customs Warehouses and Free Zones

Strategy Chapter 1 Customs Warehouses


Admission of goods Recommended Practice 5 Recommended Practice 7 Recommended Practice 8 Recommended Practice 9


Duration of stay Standard 11

Transfer of ownership Standard 12

Chapter 2 Free Zones Strategy Guidelines Establishment and control Standard 3 Standard 4 Admission of goods

Recommended Practice 9 Transfer of ownership


Recommended Practice 18 o Specific Annex E Transit

Chapter 2 Transhipment Admission to transhipment

a Declaration Recommended Practice 6


c Additional control measures Recommended Practice 9

d Authorized operations Recommended Practice 11


Recommended Practice 4 Recommended Practice 5 Recommended Practice 6

Loading and unloading Recommended Practice 8 Recommended Practice 9 Standard 11 Standard 12

Documentation Standard 13 Recommended Practice 15

139

Recommended Practice 16 o Specific Annex F Processing

Coverage of the Procedure Current Status of Compliance Chapter 1 Inward processing

Field of application Standard 3 Recommended Practice 7

Placing goods under inward processing a Authorization for inward processing

Recommended Practice 10 b Identification measures

Standard 14 Stay of the goods in the Customs territory

Recommended Practice 16 Recommended Practice 17 Standard 19

Termination of inward processing a Exportation


b Other methods of disposal Recommended Practice 22 Recommended Practice 25 Recommended Practice 26

Chapter 2 Outward processing Field of Application


Placing goods under outward processing a Formalities prior to temporary exportation of the goods

Standard 4 Such cases shall be as few as possible

Recommended Practice 5 Recommended Practice 6 b Identification measures

Standard 7 Stay of the goods outside the Customs territory


Importation of compensating products Standard 10 Standard 11 Standard 12 Standard 13

Duties and Taxes applicable to compensating products Standard 14 Standard 15 Recommended Practice 16 Recommended Practice 17 Recommended Practice 18


Recommended Practice 3 Conditions to be fulfilled

Standard 4

140

Duration of stay of the goods in the Customs territory Recommended Practice 5 Recommended Practice 6

Payment of drawback Recommended Practice 8 Recommended Practice 9 Recommended Practice 10

Chapter 4 Processing of goods for home use o Specific Annex G Temporary Admission


Standard 4 Recommended Practice 5 Standard 6

Formalities prior to the granting of temporary admission Recommended Practice 9 Recommended Practice 10

Identification measures Standard 11 Recommended Practice 12

Time limit for re-exportation Recommended Practice 14 Recommended Practice 15

Transfer of temporary admission Recommended Practice 16

Termination of temporary admission Standard 17 Standard 18 Recommended Practice 19 Recommended Practice 20 Recommended Practice 21

Cases of temporary admission b Partial conditional relief from import duties and taxes


Chapter 1 Customs offences Coverage Overall Strategy Investigation and establishment of Customs offences

Standard 6 Procedure to be followed when a Customs offence is discovered

Recommended Practice 10 Seizure or detention of the goods or means of transport

Recommended Practice 15 Administrative settlement of Customs offences



Field of application Recommended Practice 9 Recommended Practice 14 Recommended Practice 15

141

Entry Recommended Practice 16 Recommended Practice 17 Standard 24 Standard 25 Recommended Practice 26 Recommended Practice 27 Standard 28 Standard 29


Departure Recommended Practice 37

Information concerning the Customs facilities Recommended Practice 39

Chapter 2 Postal traffic Clearance of postal items

Standard 3 a Customs status of goods


c Clearance against forms CN22 or CN23 or against a Goods declaration

Standard 9 Postal items in transit

Standard 10 Collection of duties and taxes

Standard 11 Chapter 3 Means of transport for commercial use

Principles Recommended Practice 2

Arrival Standard 10 Standard 11

Subsequent calls in the Customs territory Standard 12

Departure Standard 13 Recommended Practice 14

Chapter 4 Stores Strategy Principles

Recommended Practice 2 b Documentation

Standard 6 Recommended Practice 7 Recommended Practice 8 Standard 9

c Issue of stores for consumption Standard 10 Recommended Practice 11 Recommended Practice 12

d Customs control Standard 13 Standard 14

Departure

142


Other disposal of stores Standard 20

Chapter 5 Relief Consignments Recommendations Principles


Field of Application Recommended Practice 4 Recommended Practice 5 Recommended Practice 6

o Specific Annex K Origin Chapter 2 Documentary evidence of origin

Requirement of documentary evidence of origin Recommended Practice 2 Recommended Practice 3 Recommended Practice 4

Applications and form of the various types of documentary evidence of origin

a Certificate of origin Form and content


Recommended Practice 8 Authorities and other bodies empowered to issue

certificates of origin Recommended Practice 10

b Documentary evidence other than certificates of origin Recommended Practice 12

Specific Annex A Arrival of goods in a customs territory Accept Annex A but enter reservations on

1 Recommended Practice 12 Chapter 1 since TCCP requires documents to be submitted in the official language and

2 Recommended Practice 10 of Chapter 2 since TCCP does not provide for extension of the


Chapter 1 Formalities prior to the lodgement of the Goods Declaration Production of goods to the Customs a Documentation

143

Standard 8


N The guidelines to this recommended practice provides that the documents required for the production of goods should contain no more than the data listed which does not include the consignee However for purposes of risk analysis and advance clearance which are likewise recommended best practices consignee is a very important data element Shipper is another

Section 1005 of the TCCP provides that manifest shall include the port of departure and the port of delivery with the marks numbers quantity and description of the packages and the names of the consignees thereof These data elements are all in the ships regular manifest and all are provided by the shipper per the pro-forma bill of lading or airway bill

C-1 S-5 Enter reservation and to require consignee and shipper among the data elements in

the manifest Recommended Practice 9

P The Customs should limit their information requirements to that available in carriers normal documentation and should base their requirements on those set out in the relevant international transport agreements

N same as in Recommended Practice 8 C-1 S-5


P The Customs should normally accept the cargo declaration as the only required documentation for the production of the goods

N Section 1004 requires several other documents on top of the cargo manifest such as cargo storage plan store list passenger list store list and one copy of the original duplicate of bills of lading fully accomplished

C-1

S-5 Recommended Practice 12

P Where the documents produced to the Customs are made out in a language which is not specified for this purpose or in a language which is not a language of the country into which the goods are introduced a translation of the particulars given in those documents should not be required as a matter of course

N Customs Code requires submission of documents in the official language C-1 S-6 Enter Reservation

144

Chapter 2 Temporary storage of goods Documentation Recommended Practice 5

P The Customs should accept the cargo declaration or another commercial document as the only document to be required to place the goods under temporary storage provided that all the goods mentioned in that cargo declaration or that other commercial document are placed in a temporary store

N The transportation companys commercial document in general suffices unless there are some that have to be further moved to a secondary store in which case another document is required rather than just making the necessary marking in the commercial manifest

C-3

S-3


P Goods under temporary storage shall be allowed for reasons deemed valid by the Customs to undergo normal operations necessary for their preservation in their unaltered state


P Goods under temporary storage should be allowed for reasons deemed valid by the Customs to undergo normal operations necessary to facilitate their removal from the temporary store and their further transport

G Generally normal operations necessary for the preservation of the goods in their unaltered state include bull Cleaning bull Beating bull Removal of dust bull Sorting

N In practice maybe allowed but legislation is silent

C-3 S-3


P At the request of the person concerned and for reasons deemed valid by the Customs the latter should extend the period initially fixed

N Code prohibits extension C-1

145

S-5 Reservation

Specific Annex B Importation

Chapter 3 Relief from import duties and taxes Field of application Recommended Practice 6

P Contracting Parties should consider granting relief from import duties and taxes for goods specified in international instruments under the conditions laid down therein and also give careful consideration to the possibility of acceding to those international instruments

N The general thrust of government is to remove most exemptions and just put nominal tariff except in few cases covered by international agreements of which the country is a signatory

C-1 S-5


P Relief from import duties and taxes and from economic prohibitions and restrictions should be granted in respect of the following goods under the conditions specified and provided that any other requirements set out in national legislation for such relief are complied with bull therapeutic substances of human origin blood grouping and tissue typing

reagents where they are consigned to institutions or laboratories approved by the competent authorities

bull samples of no commercial value which are regarded by the Customs to be of negligible value and which are to be used only for soliciting orders for goods of the kind they represent

bull removable articles other than industrial commercial or agricultural plant or equipment intended for the personal and professional use of a person or members of his family which are brought into the country with that person or separately for the purpose of removal of his residence to the country

bull effects inherited by a person who at the time of the death of the deceased has his principal residence in the country of importation and provided that such personal effects were for the personal use of the deceased

bull personal gifts excluding alcohol alcoholic beverages and tobacco goods not exceeding a total value to be specified in national legislation on the basis of retail value

bull goods such as foodstuffs medicaments clothing and blankets sent as gifts to an approved charitable or philanthropic organization for distribution free of charge to needy persons by the organization or under its control

bull awards to persons resident in the country of importation subject to the production of any supporting documents required by the Customs

bull materials for the construction upkeep or ornamentation of military cemeteries coffins funerary urns and ornamental funerary articles imported by organizations approved by the competent authorities

bull documents forms publications reports and other articles of no commercial

146

value specified in national legislation bull religious objects used for worship and bull products imported for testing provided that the quantities imported do not

exceed those strictly necessary for testing and that the products are used up during testing or that remaining products are re-exported or rendered commercially valueless under Customs control

N Many of these imports are already granted relief under Section 105 of the TCCP However a number are not covered

C-1 S-5


Strategy

bull Accept Annex C bull Immediately identify with EDC and Philexport export commodities that needs the




Chapter 1 Outright exportation Documentation Recommended Practice 2

P National legislation should provide that goods may be declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for outright exportation

G bull Customs usually specifies the types of goods that can be declared in this manner and normally extends the facility for goods which are in large volumes and of low risk or are unconditionally free of duties and taxes This may include for example newspapers journals and periodicals and certain bulk construction materials such as cement or sand etc The alternative format to the standard Goods declaration could be a commercial document for example an invoice or a transport document as long as the necessary particulars relating to the goods to be exported are contained in the commercial document

bull A number of international efforts are underway to standardize commercial and transport documents (eg International Maritime Organization and International Civil Aviation Organization cargo declaration formats) The United Nations Economic Commission for Europe (UNECE) has adopted a Recommendation on an aligned invoice lay-out key for international trade which is an example of a standardized format for a commercial invoice The use of any of these standardized formats for declaring goods for export in specified cases in lieu of a Goods declaration could be considered by administrations implementing this Recommended Practice

bull Customs is usually satisfied with a commercial document where the goods to be exported are not liable to export duties and taxes and do not give rise to repayment of or exemption from internal duties and taxes and where the Goods

147

declaration is not used for the compilation of statistics N Current export procedures provides an export declaration form which require an HS

Code which is not normally provided for in the commercial invoice C-1 S-3 Issue regulations allowing use of invoice standardized under the international

convention as alternative to export goods declaration



N Sec 1901-1908 of the TCCP provides the legal basis for the warehousing of imported goods to achieve the objectives of this Annex However the expanded use of the facility to goods of national origin as well as those previously dealt with under previous regimes is not supported by the TCCP

Strategy

bull Accept Annex D1 bull Enter Reservations on following Standard 2 and Recommended Practices 5 7 8 9 11

12 bull Issue implementing regulations on Standard 10

Chapter 1 Customs Warehouses


P National legislation shall provide for Customs warehouses open to any person having the right to dispose of the goods (public Customs warehouses)

N bull Sec 1901-08 of the TCCP provides for the operation of these facilities ldquowhen theconditions of the port requirerdquo It is broad enough to support establishment of many types of public warehouses

bull Historically however public bonded warehouses and off-dock cycfs were utilized as off-dock facilities when ports are congested or for purposes of decongesting the same

bull For a brief period bonded trading warehouses are allowed to operate but only for particular commodities in support of the export industry

bull Licensing of warehouses for the purposes has already been discontinued bull In the case of off-dock cycfs only cfs-cfs goods are allowed to use these off-

dock facilities

148

bull The use of the word ldquoshallrdquo in this RKC standard makes the use of public bonded facility as a matter of right is against the legislation There are now moves in Congress to altogether remove this facility

C-1 S-5 Only for goods for which the public facility was allowed to operate

Admission of goods Recommended Practice 5

P Storage in public Customs warehouses should be allowed for all kinds of imported goods liable to import duties and taxes or to prohibitions or restrictions other than those imposed on grounds of bull public morality or order public security public hygiene or health or for

veterinary or phytosanitary considerations or bull the protection of patents trade marks and copyrights irrespective of quantity

country of origin country from which arrived or country of destination

Goods which constitute a hazard which are likely to affect other goods or which require special installations should be accepted only by Customs warehouses specially designed to receive them

C-1 While Code is silent regulations limit use of public warehouses to those for the purpose of decongesting the port and lcl cargo of shipping firms with arrangements with these facilities


P Admission to Customs warehouses should be allowed for goods which are entitled to repayment of import duties and taxes when exported so that they may qualify for such repayment immediately on condition that they are to be subsequently exported

N Only imported goods are allowed C-1 S-5


P Admission to Customs warehouses with a view to subsequent exportation or other authorized disposal should be allowed for goods under the temporary admission procedure the obligations under that procedure thereby being suspended or discharged

C1 Not allowed because of different concept of private warehouses which are for storage of goods intended ultimately for home use

S-5

149


P Admission to Customs warehouses should be allowed for goods intended for exportation that are liable to or have borne internal duties or taxes in order that they may qualify for exemption from or repayment of such internal duties and taxes on condition that they are to be subsequently exported

C Constructive Exports is only allowed for sales to enterprises operating manufacturing warehouses or located in ecozones as well as free ports

S-5 Authorized operations Standard 10

P Any person entitled to dispose of the warehoused goods shall be allowed for reasons deemed valid by the Customs bull to inspect them bull to take samples against payment of import duties and taxes wherever

applicable bull to carry out operations necessary for their preservation and bull to carry out such other normal handling operations as are necessary to

improve their packaging or marketable quality or to prepare them for shipment such as breaking bulk grouping of packages sorting and grading and repacking

N Not particularly provided under existing legislation but should be allowed

C-3 S-3


P The Customs shall fix the authorized maximum duration of storage in a Customs warehouse with due regard to the needs of the trade and in the case of non-perishable goods it shall be not less than one year

C1 Codes maximum period of storage is one year while the standard provides not less than 1 year

S-5 Transfer of ownership Standard 12

P The transfer of ownership of warehoused goods shall be allowed N This standard is not applicable in public warehouse which essentially must observe

the 45 day maximum period before abandonment and for decongest purposes For private warehouse the facility is for the requirements of the owner so if ownership changes then goods must be taken out

150

C-1 S-5


Strategy

bull Not to accept Chapter D2 on Free Zones Standards 3 and 4 run counter with the RA 7916 making these facilities as outside customs control and vesting jurisdiction to PEZA Standard 18 runs counter with PD 930 and current automation procedures on exports

bull It would be better to just not include this Chapter in the accession for the time being The

issues must be further studied and the law amended if found beneficial bull All other Standards and Recommended Practices not against legislation should be complied

with and made part of the Manual of Operations for Free Zones Guidelines

bull As defined in the RKC FREE ZONE means a part of the territory of a Contracting Party where any goods introduced are generally regarded insofar as import duties and taxes are concerned as being outside the Customs territory

bull RA 7916 provides for free trade zones to be operated and managed as separate customs

territory Establishment and control Standard 3

P The Customs shall lay down the arrangements for Customs control including appropriate requirements as regards the suitability construction and layout of free zones

N Sec 8 of RA 7616 provides ecozones to be operated and managed as Separate Customs Territory As such it is the zone authority board which sets the requirements as regards the suitability construction and layout of free zones Customs sets the customs formalities and control mechanisms for the movement of goods into and out of the ecozones

C-1 S-5 Enter reservations to support separation of responsibilities between zone and

customs authorities Standard 4

P The Customs shall have the right to carry out checks at any time on the goods stored in a free zone

N bull CAOs 4-93 and 6-94 ( Rules and Regulations for Customs Operations in the Subic SEFZ and Clark SEZ respectively) provides that officials of SBMA CLARK and Customs are authorized to jointly conduct at anytime during office hours any audit check or inventory count for the verification and reconciliation of the accounts or records of any registered enterprise in the zone

bull RA 7916 on ecozones on the other hand provides for free trade zones to be operated and managed as separate customs territories and makes it the power and function of the authority to register regulate and supervise enterprises in

151

the zone bull The gaps are 1) standard allows checking at anytime by customs vs legislation

where in SEZs and SEFZs checks are allowed only during office hours and jointly with zone authorities 2) for freezones the role of customs is not even recognized

C-1 S-5 Enter reservations to maintain status quo


P No Goods declaration should be required by the Customs in respect of goods introduced into a free zone directly from abroad if the information is already available on the documents accompanying the goods

N bull Goods introduced directly from abroad to the Subic and Clark SEZs are required under CAOs 4-93 and 6-94 an admission document issued by the zone authority which is very much like a goods declaration On top of this Customs is requiring a warehousing entry but enforcement is not uniform since it is not provided for in the CAOs

bull Goods introduced into the PEZA ecozones are required transshipment

documents which are like goods declaration following the SAD C-1 S-2 Issue clarificatory regulation for Subic and Clark that the admission document is

sufficient and that there is no need for a goods declaration S5 Reservation to maintain status quo


P The transfer of ownership of goods admitted to a free zone shall be allowed N Intra-Zone transfers whether on a permanent basis such as sale or for

subcontracting is allowed However such is not stated outright in the IRR C-3 S-3

Removal of goods Recommended Practice 18

P Where a document must be produced to the Customs in respect of goods which on removal from a free zone are sent directly abroad the Customs should not require more information than already available on the documents accompanying the goods

N PD 930 on export procedure prescribes an export declaration Mapping of this form against commercial invoice following the UNECE format shows many common elements making it feasible to accept commercial invoices in lieu of export

152

declaration C-1 S-1


G bull ldquoTransshipmentrdquo means the Customs procedure under which goods are

transferred under Customs control from the importing means of transport to the exporting means of transport within the area of one Customs office which is the office of both importation and exportation

bull The only regulation issued on Transshipment is CMO 22-93 dated 22 June 93

on Supplemental Rules on Transshipments for Foreign bull The CMO provides the period of stay in port of transshipments the monitoring

and control procedures to insure these are taken out of the country within the period prescribed and provides for a supervision fee by customs

bull Many RKC provisions are not covered by this CMO albeit legislation is not

inconsistent What must be done is to complete the CMO by including the RKC provision not currently covered except for the following

o Recommended Practice 6 - to maintain the status quo until a customs ICT

system is set in place to allow electronic application monitoring and control of transshipment operations

o Recommended Practice 9 - no provision for application for extension Overstaying are subjected to close supervision and control including supervision fee

Chapter 2 Transhipment

Admission to transhipment a Declaration Recommended Practice 6

P The Customs should accept as the Goods declaration for transhipment any commercial or transport document for the consignment concerned which meets all the Customs requirements This acceptance should be noted on the document

N Regulations prescribe a Transhipment Application (Foreign) form supplied by Customs

C-1 S-5


P When the Customs consider it necessary they shall take action at importation to ensure that the goods to be transhipped will be identifiable at exportation and that

153

unauthorized interference will be readily detectable N CMO 22-93 provides for a monitoring mechanism for those that are not transhiped

within the specified period C-3 S-3



N No provision for extension However these overstaying transhipments are subjected to differential monitoring

C-1 S-5


P At the request of the person concerned and subject to such conditions as the Customs may specify the Customs should as far as possible allow goods in transshipment to undergo operations likely to facilitate their exportation

G However in some countries certain operations intended to facilitate exportation are expressly authorized These can be of different types such as grouping change of packing marking sorting and repair or replacement of damaged packing On request Customs should allow such operations when it seems reasonable

C-3 S-3



1 goods in free circulation 2 imported goods that have not been declared and which are transported in a vessel other than the

importing vessel in which they arrived in the Customs territory In Philippine Customs parlance this is termed domestic transhipment which is local transit with a change of carrier

Field of application Recommended Practice 4

P At the request of the person concerned and subject to such conditions as the Customs deem necessary the latter should allow goods to be transported under the carriage of goods coastwise procedure on board a vessel which is to call at a foreign port during its voyage coastwise

154

N Domestic carriers cannot engage in foreign trade without conversion from domestic to foreign Therefore if a domestic carrier is used as in most case of domestic transhipment they cannot call on a foreign port Also Cabotage Law prohibits conveyance of foreign goods from one port of entry to another port of entry The situation envisioned here cannot happen

S-1 S-5


P When a vessel which is to call at a place or places outside the Customs territory has been authorized to convey goods under the carriage of goods coastwise procedure those goods should be sealed only at the request of the person concerned or when the Customs consider sealing to be necessary to ensure that goods cannot be removed therefrom or other goods added thereto without this being readily apparent

N Not likely to happen except when carrier is hijacked C-1 S-5


P When a vessel transporting goods under the carriage of goods coastwise procedure is forced to deviate from its intended route and to call at a place outside the Customs territory the Customs should regard those goods as remaining under the carriage of goods coastwise procedure provided they are satisfied that the goods are those which were originally placed under the procedure


Loading and unloading Recommended Practice 8

P At the request of the person concerned the Customs should in the case of a vessel carrying only goods in free circulation under the carriage of goods coastwise procedure allow such goods to be loaded or unloaded at any place and at any time

N bull Customs does not require any form of formality for vessels carrying only free circulation goods

bull Section 906 of the Code also requires manifest only when one or both the origin and destination port is a port of entry

bull This is not an applicable provision for which reservation should be made C-1 S-5

155


P At the request of the person concerned the Customs should allow goods under the carriage of goods coastwise procedure to be loaded or unloaded at a place other than that normally approved for that purpose even if the vessel is also carrying imported goods that have not been declared or goods placed under any other Customs procedure Any expenses chargeable shall be limited to the approximate cost of the services rendered

N Domestic carriers are not under supervision of Customs and are free to load and unload at any domestic port The Customs interest is in the imported goods for which there are existing monitoring and control procedures

C-3 S-5

Standard 11

P When the transport of goods under the carriage of goods coastwise procedure is interrupted by accident or force majeure the Customs shall require the master or other person concerned to take reasonable precautions to prevent the goods from entering into unauthorized circulation and to advise the Customs or other competent authorities of the nature of the accident or other circumstance which has interrupted the journey

N Implied as a responsibility for the carrier to avoid having to pay the duties taxes and penalties for the goods However this must be made clear in the regulations on domestic transhipment

C-3 S-3

Standard 12

P When a vessel transporting goods under the carriage of goods coastwise procedure is conveying imported goods that have not been declared or goods placed under any other Customs procedure the Customs shall allow goods under the carriage of goods coastwise procedure to be loaded or unloaded as soon as possible after the arrival of the vessel at the place of loading or unloading

N Legislation is Silent Advisable to put these in the statement of general principles of the regulations to be issued

C-3 S-3


P The Customs shall require the master or other person concerned to present only a single document giving details of the vessel listing the goods to be carried under the carriage of goods coastwise procedure and stating the port or ports in the Customs territory at which they are to be unloaded This document once endorsed by the Customs shall constitute the authorization for the conveyance of the goods under the carriage of goods coastwise procedure

156

N CAO 12-77 dtd Nov 7 1977 provides the rules and regulations on the transhipment of imported cargoes from one port to another A Transhipment Permit form is prescribed with the following supporting documents bull Transit manifest bull Carriers bond bull Alert Notification (telegram) to the collector at the port of destination bull Amendment to IFM (if needed)

C-1 S-3 Particularly under the E-Commerce Law a single document must be required

(transhipment application) and the needed data bases for verification (carrier bond manifest including amendment) must be made available in digital format and for the Pre-Alert to be automatically sent by the system This has to be provided under the ICT system


P When a general authorization has been granted for a vessel the Customs should require only a list of the goods to be conveyed under the carriage of goods coastwise procedure before the goods are loaded

N Not allowed under the CAO C-1

S-35 Upon completion of the electronic transhipment procedure this may be implemented In meantime reservation is in order


P In relation to goods unloaded from a vessel cover ed by a specific authorization the Customs should require the master or other person concerned to present only a copy of the authorization listing the goods to be unloaded at that port In the case of a vessel granted a general authorization only a list of the goods unloaded should be required



Specific Annex F Processing

Coverage of the Procedure

bull Inward processing - the Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved from payment of import duties and taxes on the basis that such goods are intended for manufacturing processing or repair and subsequent exportation

bull Compensating products ndash the products resulting from the manufacturing processing or repair

of goods for which the use of the inward processing procedure is authorized

157

bull Equivalent goods ndash domestic or imported goods identical in description quality and technical characteristics to those imported for inward processing which they replace

Current Status of Compliance Sec 2001-2004 of the TCCP on Manufacturing Bonded Warehouses provides the legal basis for the conduct of mainstream inward processing in the country A person intending to regularly undertake inward processing may apply a license for his manufacturingprocessing facility as a Customs Manufacturing Bonded Warehouse (CMBW) CAO 2-91 and CMO 31-91 are the customs issuances implementing Sections 2001-04 of the Customs Code Many inward processing situations cannot be addressed by Sec 2001-04 of the TCCP and its implementing regulations The regulations on the operations of Common Bonded Warehouses partly address the requirements of small companies Currently there are 10 common garments BW and 10 miscellaneous Common BWs which have hundreds of members called subcontractors However a moratorium on the establishment of more common warehouses was issued after the discovery of massive abuses of the facilities Sec 105-d of the TCCP has also been used as a basis for inward processing It provides that ldquoArticles brought into the Philippines for repair processing or reconditioning to be re-exported upon completion of the repair processing or reconditioningupon giving of a bond in an amount equal to one-and -a half times the ascertained duties and taxes However the regulations implementing the processing provision of the code which is CAO 3-78 has been revoked after discovery of abuses Therefore the breadth of inward processing conceived in this Specific Annex of RKC is not completely supported by current legislation Inward processing as conceived in the RKC does not require the intermediation of CMBWs (regular or common) nor is it a requirement that the importer and the processor be one and the same person Also unsupported is termination of the process with equivalent goods rather than the goods imported Proposed Strategy of Compliance ndash Accept this Specific Annex but enter reservations as indicated in the following gap analysis


Field of Application Standard 3

P Inward processing shall not be limited to goods imported directly from abroad but shall also be granted for goods already placed under another Customs procedure

G Goods may qualify for Inward Processing irrespective of the Customs procedure they were under immediately prior to the application for Inward Processing This includes goods that have been previously cleared for home use

N For inward processing in a manufacturing bonded warehouse this principle is followed provided the applicant or source is another bonded warehouse an ecozone or if entered under consumption by a BOI- registered enterprise For other suppliers where the goods have already been cleared for home use and already paid import duty and tax there is no Customs regulations providing the mechanics for the refund

C-1 S-5 Reservation must be made in so far as goods already cleared from home use until a

control system can be set in place to prevent abuse of this procedure

158


P The possibility of determining the presence of the imported goods in the compensating products should not be imposed as a necessary condition of inward processing when (a) the identity of the goods can be established bull by submitting the details of the inputs and the process of manufacture of the

compensating products or bull during the processing operations by Customs control or

(b) the procedure is terminated by the exportation of products obtained from the

treatment of goods identical in description quality and technical characteristics to those admitted for inward processing

N Manufacturing warehousing operations does not require at all that the imported material be identifiable in the finished goods to be entitled to inward processing Reliance is made on the formula of manufacture and the authorized manufacturing process But this matter is implied rather than outrightly stated in legislation and it would be advisable to make the legislation clear on this matter

C-3 S-3

Placing goods under inward processing a Authorization for inward processing Recommended Practice 10

P When an application for inward processing is made after the importation of the goods and meets the criteria for authorization the authorization should be granted retroactively

G The principle contained in this Recommended Practice is an extension of the facility provided in Standard 3 of this Chapter Recommended Practice 10 offers traders the opportunity to be granted a retrospective authorization for inward processing for goods that have already been cleared for home use The main advantages are that it offers a greater facility to traders by enabling duties and taxes to be repaid more quickly than would be possible under the drawback procedure (where it is applied) and in some instances enables them to obtain a refund of duties and taxes which might not be available under other procedures

N bull Supplies of goods to manufacturing bonded warehouses are deemed exports and the import duties and taxes paid are entitled to refund

bull The procedure followed when the source of the goods is another bonded facility

is constructive exports (for the supplier) and constructive imports for the inward processor For those non-bonded facility but are BOI registered the control and security of constructive imports is not even there resulting in abuses and fraud on customs revenue For those from non-bonded facility as well as non-BOI the exemption under inward processing has currently no acceptable control system and implementing regulations Their situation may however be partly managed under the NIRC if the inward processor exports at least 70 of its production

159

Sales and inward processing in this case is zero-rated for VAT for which taxes paid is amenable for refund

C-1 S-35 Issue regulations for BOI registered sources to apply for inward processing either

thru constructive exports and for the receiving facility for constructive imports For non-bonded and BOI sources enter reservations

b Identification measures Standard 14

P The requirements relating to the identification of goods for inward processing shall be laid down by the Customs In carrying this out due account shall be taken of the nature of the goods of the operation to be carried out and of the importance of the interests involved

G For the identification of goods admitted for inward processing Customs will normally rely on foreign seals affixed to the goods on marks numbers or other indicationspermanently affixed to them on the description of the goods or scale plans or photographs Customs may also take samples or affix Customs marks (seals stamps perforations etc) in order to identify the goods Where national legislation or the authorization provides Customs may also have access to the importers records

N Legislation is silent C-3 S-3

Stay of the goods in the Customs territory Recommended Practice 16


N The law does not provide extension under sec 105-d while only 3 months extension is allowed for manufacturing warehouse operations

C-1 S-5


P Provision should be made for continuing inward processing in the event of transfer of ownership of the imported goods and the compensating products to a third person provided that that person assumes the obligations of the person granted the authorization


160

Standard 19

P Provision shall be made to permit compensating products to be exported through a Customs office other than that through which the goods placed under inward processing were imported

N Legislation is silent but this is permitted C-3 S-3

Termination of inward processing a Exportation Standard 20

P Provision shall be made to permit inward processing procedures to be terminated by exportation of the compensating products in one or more consignments

N Permitted though not expressly stated in the legislation C-3 S-3

Standard 21

P Upon request by the person concerned the competent authorities shall authorize the re-exportation of the goods in the same state as imported with termination of inward processing

N Sec 2002 requires that materials be used else duties and taxes be paid For a while the Embroidery Law allowed this also In practice goods are being re-exported under the same state on the guise of being defective Processing under Sec 105d allows this by implication

C-1 S-1 Amend the law to allow this to support trade and to stop circumventions that are

opportunities for corruption b Other methods of disposal Recommended Practice 22

P Provision should be made for suspending or terminating inward processing by placing the imported goods or the compensating products under another Customs procedure subject to compliance with the conditions and formalities applicable in each case

G The inward processing procedure is discharged for the imported goods when the compensating products or goods in the unaltered state have been declared for another Customs procedure and all other conditions for use of the procedure have been complied with

N Putting the compensating products under the regimes of free zones as well as home use is allowed Other regimes like transits or warehousing are not supported

C-1

161


P The products obtained from the treatment of equivalent goods should be deemed to be compensating products for the purposes of this Chapter (setting-off with equivalent goods)

G National legislation usually requires that the products exported have been obtained from the goods imported In some cases however authorization may be given for the use of goods equivalent to those admitted for inward processing for the production of the actual compensating products When this authorization is granted the equivalent goods must normally be of the same commercial quality and have the same technical characteristics as the imported goods

N This recommended practice is not supported under current legislation Any imported goods used not for the intended purpose is considered as illegally withdrawn

C-1 S-5


P When setting-off with equivalent goods is allowed the Customs should permit the exportation of compensating products prior to the importation of goods for inward processing

N This recommended practice is not supported under current legislation C-1 S-5

Chapter 2 Outward processing

G bull Outward processing means the Customs procedure under which goods which

are in free circulation in a Customs territory may be temporarily exported for manufacturing processing or repair abroad and then re-imported with total or partial exemption from import duties and taxes

bull Compensating products means the products obtained abroad and resulting from

the manufacturing processing or repair of goods for which the use of the outward processing procedure is authorized

N bull Compared to Inward Processing real Outward Processing is not at present a significant business activity in the country The only documented cases of outward processing pertains to articles that are easily identifiable and sent abroad for repairs like vessels and aircrafts and computers equipment machineries and parts However there is optimism that with China providing cheap labor and excess manufacturing capacity outward processing of raw materials will take-on and prosper in the future

bull Sec 105-c provides that ldquocost of repairs excluding the value of the article used

made in foreign countries upon vessels and aircrafts documented registered or licensed in the Philippinesrdquo shall be qualified as conditionally free

162

bull Sec 105(x) provides that ldquoarticles of easy identification exported from the Philippines for repair and subsequently re-importedrdquo shall be qualified as conditionally free imports There are no provisions dealing with goods (particularly raw materials) in free circulation sent abroad for manufacturing or processing for subsequent re-importation to the Philippines

bull Sec 105(t) while dealing with ldquoPhilippine articles previously exported and

returnedrdquo provides that the article must not have been advanced in value or improved in condition by any process of manufacture or other meansrdquo

bull It may be said therefore that Philippine national legislation is not compliant with

Specific Annex F2 of the RKC articles sent abroad for repairs which is covered by sec 105 (x)

S bull Not to accept this Annex for the time being to facilitate the countrys accession to the RKC

bull Undertake a survey to ascertain if there is significant outward processing

business activity not covered by the existing legislation to justify amending the law Only then should the country again consider accepting this specific Annex

Field of Application Recommended Practice 2

P Outward processing should not be refused solely on the grounds that the goods are to be manufactured processed or repaired in a given country

Standard 3

P Temporary exportation of goods for outward processing shall not be restricted to the owner of the goods

Placing goods under outward processing a Formalities prior to temporary exportation of the goods Standard 4

P National legislation shall enumerate the cases in which prior authorization is required for outward processing and specify the authorities empowered to grant such authorization

Such cases shall be as few as possible Recommended Practice 5

P Persons who carry out regular outward processing operations should on request be granted a general authorization covering such operations

163


P The competent authorities should fix a rate of yield for an outward processing operation when they deem it necessary or when it will facilitate the operation The description quality and quantity of the various compensating products shall be specified upon fixing that rate


P The requirements relating to the identification of goods for outward processing shall be laid down by the Customs In carrying this out due account shall be taken of the nature of the goods of the operation to be carried out and of the importance of the interests involved

Stay of the goods outside the Customs territory Standard 8

P The Customs shall fix the time limit for outward processing in each case Recommended Practice 9


Importation of compensating products Standard 10

P Provision shall be made to permit compensating products t o be imported through a Customs office other than that through which the goods were temporarily exported for outward processing

Standard 11

P Provision shall be made to permit compensating products to be imported in one or more consignments

Standard 12

P Upon request by the person concerned the competent authorities shall allow goods temporarily exported for outward processing to be re-imported with exemption from import duties and taxes if they are returned in the same state This exemption shall not apply to import duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing

164

Standard 13

P Unless national legislation requires the re-importation of goods temporarily exported for outward processing provision shall be made for terminating the outward processing by declaring the goods for outright exportation subject to compliance with the conditions and formalities applicable in such case

Duties and taxes applicable to compensating products Standard 14

P National legislation shall specify the extent of the exemption from import duties and taxes granted when compensating products are taken into home use and the methods of calculation of that exemption

Standard 15

P The exemption from import duties and taxes provided for in respect of compensating products shall not apply to duties and taxes which have been repaid or remitted in connection with the temporary exportation of the goods for outward processing


P Where goods temporarily exported for outward processing have been repaired abroad free of charge provision should be made for them to be re-imported with total exemption from import duties and taxes under the conditions laid down in national legislation


P The exemption from import duties and taxes should be granted if the compensating products were placed under another Customs procedure prior to being declared for home use


P The exemption from import duties and taxes should be granted if the ownership of the compensating products is transferred before they are taken into home use

Chapter 3 Drawback

bull ldquodrawback procedurerdquo means the Customs procedure which when goods are exported

provides for a repayment (total or partial) to be made in respect of the import duties and taxes charged on the goods or on materials contained in them or consumed in their production

bull ldquoequivalent goodsrdquo means domestic or imported goods identical in description quality and

technical characteristics to those under the drawback procedure which they replace bull drawback means the amount of import duties and taxes repaid under the drawback

procedure

165


P National legislation should include provision for the application of the drawback procedure in cases where the goods which have borne import duties and taxes have been replaced by equivalent goods used in the production of exported goods

G bull In principle imported goods which have borne import duties and taxes must be exported in order to qualify for drawback However as a facility to traders where such goods are replaced by equivalent goods in the production of exported goods this provision recommends that the drawback procedure should also be applied

bull This provision should apply whether or not it is possible to distinguish the

imported goods from the equivalent goods for example where they have not been segregated for storage The question of equivalence is related to the quantity of the goods rather than to the identification of precisely which goods had borne the import duties and taxes From an economic point of view allowing equivalent goods which are of domestic origin as replacements helps to generate domestic economic activities

N bull Sec 105-c provides the conditions for refund or tax credit two of which are o The actual use of the imported materials in the production or manufacture of

the article exported o There are no available locally produced or manufactured competitive

subtitutes

bull From the foregoing it is clear that the imported goods itself must be exported not equivalent goods to be entitled to drawback

C-1 S-1 bull Enter reservation first

bull Study must be made if there are current business operations that would be

benefited by the acceptance of this standard and if the economy as a whole will benefit In the case of sugar exports quota giving countries like the US allow the Philippines to import sugar for its domestic needs so the country can export more of the domestically produced sugar and to fully utilize the national quota

Conditions to be fulfilled Standard 4

P The Customs shall not withhold payment of drawback solely because at the time of importation of the goods for home use the importer did not state his intention of claiming drawback at exportation Similarly exportation shall not be mandatory when such a statement has been made at importation

N The Customs Code itself does not make prior statement of intention to export and to avail of drawback to be entitled to it However the implementing regulations (CAO 14-72 and CMO 25-86) provide that the goods declaration be clearly marked ldquoSubject to Drawbackrdquo meaning that the

166

intention must be made at the time of import to avail of drawback Furthermore CMO 41-83 requires that the export declaration be marked in red ldquoSubject to Drawbackrdquo and in a ruling made by the Department of Finance circulated under CMC 153-90 failure to mark export document is a disqualification for the grant of duty drawback On the other hand goods entered under warehousing (Sec 1901-08 of the TCCP) withdrawn for home use upon payment of duties and taxes and manufacturing into finished goods may avail of drawback if said finished goods were delivered to a manufacturing bonded warehouse (Sec 2001-04) and exported In this situation there is no prior declaration of intention and yet drawback is allowed Examples are those packaging companies manufacturing KD boxes mainly for the domestic market But whenever they supply customs garment manufacturing warehouses for exports the duties and taxes paid on withdrawal of the raw materials may be subject to refund

C-1 Implementing Regulations and the law are not consistent and on the whole there is no compliance with RKC

S-3 For facilitation CAO and CMO must be issued rectifying the inconsistency Marking subject to drawback is for facilitation of processing which is the lookout of trade but cannot be a disqualification

Duration of stay of the goods in the Customs territory Recommended Practice 5

P Where a time limit for the exportation of the goods is fixed beyond which they no longer qualify for drawback this should upon request be extended if the reasons are deemed valid by the Customs

N Sec 106(c)(4) requires that exportation shall be made within one year after importation of materials and the claim for refund or credit shall be filed within 6 months of export with no provision for extension

C-1 S-5


P Where a time limit is fixed beyond which claims for drawback will not be accepted provision should be made for its extension for commercial or other reasons deemed valid by the Customs

N No provision for extension C-1 S-5

Payment of drawback Recommended Practice 8

P National legislation should provide for the use of electronic funds transfer for the payment of drawback

N Drawback claims when granted are usually paid in tax credits unless the beneficiary

167

can prove that he will have no use for credit in which case he must line up for priority of payment in the annual budget set by the Government for cash refunds which are in Treasury Checks

C-1 S-1


P Drawback should also be paid on deposit of the goods in a Customs warehouse or introduction of the goods into a free zone on condition that they are subsequently to be exported

G bull Often goods meant for export are deposited in a Customs warehouse pending the clearance formalities and the arrival of the vessel or there are delays in the export of the goods due to the non-arrival or non-availability of vessels or due to force majeure This Recommended Practice enables the exporter to obtain the drawback instead of waiting for the actual shipment of the goods It should be noted that in applying this provision Customs would be permitting the entry into a Customs warehouse of goods having previously borne import duties and taxes a departure from the definition of the term ldquoCustoms warehousesrdquo

bull Free zones are considered to be areas outside the Customs territory insofar as

the duties and taxes on goods are concerned Thus if certain goods are eligible for payment of drawback when exported they would automatically qualify for such payment once they are introduced into a free zone

N The Code however in so far as duty drawback is concerned requires actual exports of the imported goods and not just receipt at a customs warehouse unlike delivery to a free zone which is considered as constructive exports for which duty drawback may be given

C-1 S-5 Reservation on deliveries to customs warehouses and prior to exports


P The Customs should if so requested pay drawback periodically on goods exported during a specified period

N Currently application for drawback is a one time process undertaken after full export of the goods imported

C-1 S-135 This is a good trade facilitation measure To align the procedure to the manufacturing

warehouse operations system to achieve this must be developed In meantime so as not to delay accession enter reservation

Chapter 4 Processing of goods for home use

This Chapter of Annex F was not accepted by the US in its accession to the RKC Processing of goods for home use means the Customs procedure under which imported goods may be manufactured processed or worked under Customs control before clearance for home use The procedure could lower the amount of the import duties and taxes payable since the product(s) of the operation may have a lower tariff rate value and quantity compared to those of the imported goods

168


1 The duties and taxes payable under the processing for home use is computed based on the value classification and quantity of the outputs not on the imported material or input as is the case under Sec 1901-08 of the TCCP

2 As contemplated the rate of duty on the output product(s) for most inward processing for

home use operations would be lower than the applicable rates on the imported inputs (although it may be the same or even ) The kinds of businesses that would avail of the procedure are those that would not be normally viable if managed under Sec 1901 For example it may be considered in the economic interest for more than 5 year old motor to be imported for purposes of recovering usable parts If duties and taxes were to be paid based on the 30 rate of duty of cars and their depreciated value the cost of the output products would be prohibitive But these cars are first broken down into their component into parts and then allowed to enter the customs territory as parts as would be the case under processing for home use then the operations may be prove viable

In theory the operations of free ports and freezones can support these operations If allowed by zone authorities payment of customs duties and taxes shall be based on the output goods and not on the imported inputs to the processing To be compliant with the provisions of this Annex the procedure must be allowed in the customs territory as well Under the Code the only way goods may be brought in for manufacturing or processing or eventual home use is thru Section 1908 So the whole Annex is not consistent

C-1 S-6

Not to Accept

Specific Annex G Temporary Admission

Coverage The Customs procedure under which certain goods can be brought into a Customs territory conditionally relieved totally or partially from payment of import duties and taxes such goods must be imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any change except normal depreciation due to the use made of them The fundamental principle of temporary admission with re-exportation in the same state is to allow under certain conditions the importation of goods into the Customs territory of the country of destination for a specified period without collecting the duties and taxes applicable to those goods Field of application Standard 4


G It is not necessary that the goods should have come directly from abroad In particular temporary admission can be granted on termination of a transit procedure or warehousing procedure and for goods coming from free ports or free zones

169

N Temporary Admission may be granted at the termination of transit and for goods coming from free ports or free zone However allowing temporary admission at the end of the warehousing period (one year maximum) is not consistent with Sections 1907 and 1908 which provisions limit withdrawal to consumption transportation to another port for exportation or for delivery on board an international aircraft or vesselSec 1908 on the other hand provides that articles not withdrawn at the expiration of the prescribed period shall be sold at public auction

C-1 S-5 However regulations must be issued allowing Temporary Admission following

completion of transit and coming from a free portzone Recommended Practice 5

P Temporary admission should be granted without regard to the country of origin of the goods the country from which they arrived or their country of destination

N There is nothing in Sec 105 that prohibits this for certain countries either origin or destination

C-3 S-3

Standard 6

P Temporarily admitted goods shall be allowed to undergo operations necessary for their preservation during their stay in the Customs territory Formalities prior to the granting of temporary admission

G Temporarily admitted machines and apparatus can undergo normal maintenance Maintenance is intended to prevent excessive wear or breakdown and often involves replacing certain parts (eg gaskets) For machines maintenance work can even cover fairly complex operations If these operations seem reasonable to Customs they should be authorized It should nevertheless be understood that operations needed to keep temporarily admitted articles in good condition are not mandatory

N Legislation is silent There is nothing that would disallow this C-3 S-3

Formalities prior to the granting of temporary admission Recommended Practice 9

P The Customs should grant temporary admission without a written Goods declaration when there is no doubt about the subsequent re-exportation of the goods

G bull Many Customs administrations accept and process Goods declarations electronically and use the techniques of risk management to release the goods automatically

bull International documents such as the ATA carnet can take the place of national

temporary admission documents for Contracting Parties to the relevant Conventions (Istanbul Convention or ATA Convention) Since these temporary admission papers are covered by an international guaranteeing chain their use

170

may make it unnecessary to provide another form of security when the goods are placed under the temporary admission procedure

C-1 In all the instances of temporary admissions the TCCP requires written security which means that at the very least the clearance process is under yellow lane processing (needed security and other supporting docs must be presented) In fact the goods must be properly identified so it goes thru red lane


P Contracting Parties should give careful consideration to the possibility of acceding to international instruments relating to temporary admission that will enable them to accept documents and guarantees issued by international organizations in lieu of national Customs documents and security

G bull The Convention on Temporary Admission (Istanbul Convention) of 26 June 1990 combines in a single instrument all the provisions concerning temporary admission that are contained in a large number of existing conventions and agreements It endeavours to simplify and harmonize procedures in pursuit of economic humanitarian cultural social or touristic objectives

bull Annex A to the Istanbul Convention requires each Contracting Party to accept the

ATA carnet in lieu of its national Customs documents and as security for payment of the duties and taxes In many cases it provides for temporary admission without a Customs document and without security

N bull The Philippines is not a signatory to the Instanbul Convention nor of any convention on temporary admission All manifested cargo are required to be entered using the standard goods declaration forms

bull Likewise baggage accompanying arriving passengers outside of those that

maybe released under the simplified passenger customs declaration form are required the regular goods declaration form (formal or informal entry)

C-1 S-5 While reservation must be made a program must be initiated initially at the airport

and for arriving passengers to accept ATA carnet covering accompanied goods that maybe released under temporary admissions Study accession to the Instanbul Convention

Identification measures Standard 11

P Temporary admission of goods shall be subject to the condition that the Customs are satisfied that they will be able to identify the goods when the temporary admission is terminated

G This principle does not mean however that the goods must be physically examined more than is required under other procedures The principle of risk management as enumerated in Chapter 6 of the General Annex is equally applicable in the temporary admission procedure

N The Customs Code does not directly state but CAO7-72 the implementing regulation provides that the Customs examiner undertake an examination for the purpose of proper identification

171

C-1 S-3 The regulations may be amended to support this standard


P For the purpose of identifying goods temporarily admitted the Customs should take their own identification measures only where commercial means of identification are not sufficient

G bull Customs may identify the goods by description by photographs or by sampling or by affixing its own marks

bull Affixing Customs marks should be the exception because it considerably slows

down clearance formalities customs seals (for example lead seals available in several sizes appropriate to the goods to be identified) identification band stamp punches (on a malleable metal part or on sealing wax) and rubber-stamp marks (on sprayed paint) or corrosive stamps on stainless steel objects

bull In the great majority of cases existing the necessary data are already available in

commercial documents such as the delivery note bill of lading invoice or descriptive list The indications in these papers are generally sufficient to enable the goods to be identified

N Legislation is silent on how identification must be done and on the use of special proceduresgadgets

C-3 S-3

Time limit for re-exportation Recommended Practice 14


N Maximum period for extensions allowed B 6 months D None G 3 months G-1 6 months I 6 months J 6 months M None Q None

C-1 Legislation is silent on how identification must be done and on the use of special proceduresgadgets

S-5 However Customs Code must be amended later to also provide extension for D and Q when the Collector of the Port finds it meritorious

172


P When the goods granted temporary admission cannot be re-exported as a result of a seizure other than a seizure made at the suit of private persons the requirement of re-exportation should be suspended for the duration of the seizure

G Goods admitted under temporary admission may be seized by customs authorities for violation of the condition for temporary admission Pending the resolution of the seizure proceedings and to avoid difficulties that will be entailed in exporting goods the requirement to re-export them should be suspended for the duration of a seizure

N Legislation is silent on this

C-3 S-3


P On request the Customs should authorize the transfer of the benefit of the temporary admission to any other person provided that such other person

(a) satisfies the conditions laid down and (b) accepts the obligations of the first beneficiary of the temporary admission


Termination of temporary admission Standard 17

P Provision shall be made to permit temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported


Standard 18

P Provision shall be made to permit temporarily admitted goods to be re-exported in one or more consignments

N Legislation is silent

C-3 S-3

173


P Provision should be made for suspending or terminating temporary admission by placing the imported goods under another Customs procedure subject to compliance with the conditions and formalities applicable in each case

G Upon placement of the goods into free ports free zones or Customs warehouses the temporary admission procedure should be terminated immediately In some countries however the temporary admission procedure is not terminated but merely suspended pending the physical exportation of the goods or their being placed under another Customs procedure for example clearance for home use Thus the temporary admission procedure is provisionally interrupted and will be terminated upon the entry of the goods into the subsequent procedure

N bull Sec 105 b d g g-1 i j m and q only provides two ways for terminating temporary admissions These are exportation or clearance for home use Procedures that are ldquolike exportationrdquo such as delivery into free ports or free zones or areas considered outside Customs territory for duty and tax purposes and for which relief or refund of duties and taxes paid or for zero rating of VAT is permitted should also be considered a legal terminations of temporary admissions

bull Constructive exports to customs manufacturing warehouses is for finished goods

that will be processed further in another facility and not goods that will not undergo any transformation or remain in their original state

C-1 S-5 Reservation because of warehousing However termination of temporary admission

by delivery to a free port or free zone must be recognized Recommended Practice 20

P If prohibitions or restrictions in force at the time of temporary admission are rescinded during the period of validity of the temporary admission document the Customs should accept a request for termination by clearance for home use

N Termination thru home use implies that at the time of filing for home use current prohibitions or restrictions govern rather than those in effect at time of temporary admission To be clear regulations must be issued

C-3 S-3


P If security has been given in the form of a cash deposit provision should be made for it to be repaid at the office of re-exportation even if the goods were not imported through that office

N There is nothing in the legislation that does not support this However supporting this recommended practice requires a good system which must preferably be an IT system to insure proper control Better to enter reservation until the corresponding IT system is set in place

C-3 S-5

174

Cases of temporary admission b Partial conditional relief from import duties and taxes Recommended Practice 23

P Goods which are not included in Recommended Practice 22 and goods in Recommended Practice 22 which do not meet all the conditions for total conditional relief should be granted temporary admission with at least partial conditional relief from import duties and taxes

G bull Some countries are increasingly allowing commercial utilization during the temporary admission procedure This applies particularly to machines imported temporarily to perform specific tasks (eg construction machinery production machinery production trials) This possibility is justified by the fact that the home use procedure for high technology machines with high rates of duties and taxes would seem to be a disproportionate measure if the machines were to be used only for a short time

bull This recommendation provides for the temporary admission of these goods at

least with partial conditional relief N bull Philippine legal jurisprudence is that when there is an enumeration what is not

included can not extended the entitlement or coverage of the legal provision These cannot even be entitled to partial relief

bull However there have been occasions in the past with Presidential Orders

temporary admission have been allowed for construction equipment used in government and foreign funded projects

bull Notwithstanding this cannot be made part of regular national legislation

C-1 S-5

Specific Annex H Offences

Chapter 1 Customs offences

Coverage




Overall Strategy



175



P Personal searches for Customs purposes shall be carried out only when there are reasonable grounds to suspect smuggling or other Customs offences which are regarded as serious

N Except for some unnumbered memorandum at NAIA mandating the creation of Customs physical examination rooms and the conduct of body searches thereat legislation is silent Sec 221 and 2212 TCCP ndash may now be compliant

C-3 S-3

Procedure to be followed when a Customs offence is discovered Recommended Practice 10

P The Customs should set out the particulars of Customs offences and the measures taken in offence reports or administrative records Seizure or detention of the goods or means of transport

G Record usually contains such particulars as the nature of the offence discovered the laws violated date and location of discovery of the offence persons implicated description of any goods conveyances or documents involved nature of the investigations undertaken and their results and officers involved in the discovery and investigation of the offence from the time of the discovery of the offence to the time it is finally settled by an administrative settlement court proceedings or just closed without any further action Some administrations maintain such a record in an investigation paper or file Recording the measures taken in the offence report or in the administrative record is not only to protect the rights of the defendants as well as Customs but also to compile statistics and build risk assessment techniques In addition this will later facilitate to establish what happened

N The main files maintained by Customs for customs offences are the case dockets containing all the documents related to the seizure cases seizure recommendation WSD offer of evidence affidavits etc which while containing most of the data above is not organized to be a basis of compiling statistics not for risk management

C-3 S-3

Seizure or detention of the goods or means of transport Recommended Practice 15

P The Customs should release from seizure or detention means of transport that have been used in the commission of a Customs offence where they are satisfied that

176

bull the means of transport have not been constructed adapted or altered or fitted in any manner for the purpose of concealing goods and


bull where required adequate security can be given N While Section 2301 of the TCCP on release of seized property under cash bond may

be liberally interpreted to apply to the means of transport as well release is not allowable when there is prima facie evidence of fraud Furthermore Section 2530 provides that the mere carrying or holding on board of contraband or smuggled articles in commercial quantities shall subject such vehicle aircraft or any other craft subject to forfeiture Exempted are duly authorized common carriers

C-1 S-5

Administrative settlement of Customs offences Standard 19

P The Customs shall take the necessary measures to ensure where applicable that as soon as possible after a Customs offence is discovered bull the administrative settlement of the latter is initiated and bull the person concerned is informed about the terms and conditions of the

settlement the avenues of appeal and the time limits for such appeals N While various legal remedies are available for the release of the goods pending

resolution of seizure case legislation provides that the affected party and not Customs should initiate the same Two of these remedies are release under cash bond and redemption Other customs offenses not involving seizure but for which amounts are collectible maybe subject of compromise settlement

C-3 S-3 Regulations must be issued making it the responsibility of concerned customs

officials to initiate these remedies Recommended Practice 21

P Where a traveller is regarded as having committed a Customs offence of minor importance it should be possible for the offence to be settled without delay by the Customs office which discovers it

N If the travellers offense does not warrant the seizure of goods as when the discrepancy threshold is not reached the matter can be administratively settled at once by the office that discovers the offense (payment of additional duty plus surcharge if warranted) However when goods are not declared or if these are prohibited goods seizure is mandatory

C-1 S-5

177

Standard 25

P Where a Customs offence occurs as a result of force majeure or other circumstances beyond the control of the person concerned and there is no question of negligence or fraudulent intent on his part no penalty shall be applied provided that the facts are duly established to the satisfaction of the Customs

N Under the Customs Code there is prima facie fraud when certain conditions are obtaining rendering the goods liable for seizure Goods that are not declared or misdeclared are to be forfeited in favor of the government During seizure proceeding force majeure and other circumstances beyond the control of the person maybe raised to show there is no negligence nor fraudulent intent While this defense has not been entertained there have been cases when on appeal with higher authorities or with courts no penalty is imposed For offenses related to Customs declaration such as misdeclaration undervaluation and misclassification but the discrepancies do not exceed the threshold for seizure the person concerned may apply for non-imposition of surcharge which is already covered by CAO 10-93

C-1 S Not to accept this standard for which reason we cannot accept Annex H






bull Enter reservation on Recommended Practices 9 and 14 bull Develop systems and issue regulations for Recommended Practices 15 23 27 29 31

37 and 37 bull Amend law for Recommended Practices 16 and 17



P Travellers should be permitted to make an oral declaration in respect of the goods carried by them However the Customs may require a written or electronic declaration for goods carried by travellers which constitute an importation or exportation of a commercial nature or which exceed in value or quantity the limits laid down in national legislation

178

N A simplified customs declaration form in English is currently required of all travelers which is accomplished in the course of accomplishing the disembarkation card If the amount of goods being brought in is more than $300 a regular form is required

C-1 S-5 Reservation needed since the customs declaration is already accomplished in the

course of preparing the mandatory disembarkation card Recommended Practice 14

P A system of flat-rate assessment should be applied to goods declared for home use under the facilities applicable to travellers provided that the importation is of a non-commercial nature and that the aggregate value or quantity of the goods does not exceed the amounts laid down in national legislation

N Section 105-f of the TCCP has a flat rate assessment for returning residents But this provision does not apply to non-residents It maybe argued that this Recommended Practice which deals with home use only pertains to returning residents

C-1

S-5N Payment System of Customs remains Payments to the Bank and for some stations Cash Payment to Collecting Officers


P Wherever possible the use of credit cards or bank cards should be acceptable as a means of payment for services rendered by the Customs and for duties and taxes

N Credit card is not acceptable currently but TCCP does not prohibit its use C-3

S-3 Need for a system to accept credit cards from travelers

Entry Recommended Practice 16

P The quantities of tobacco goods wine spirits and perfume allowed to be imported free of import duties and taxes by travellers should be not less than bull 200 cigarettes or 50 cigars or 250 grams of tobacco or an assortment of

these products of a total weight not exceeding 250 grams bull 2 litres of wine or 1 litre of spirits bull frac14 litre of toilet water and 50 grams of perfume


N Section 105 of the TCCP allows duty and tax free imports only for wearing apparel articles of personal adornment toilet articles portable tools and instruments theatrical costumes and similar effects accompanying travelers or tourist or arriving

179

within a reasonable time before or after their arrival The items listed in this RP are not included in the Sec 105g

C-1 S-1 Need to amend the law to allow these amounts and also for consistency with RP 17


P In addition to the consumable products allowed to be imported free of import duties and taxes within specified quantitative limits travellers should be permitted to import free of import duties and taxes goods of a strictly non-commercial nature up to an aggregate value of 75 Special Drawing Rights (SDRs) A lower amount may be fixed for persons less than a certain age or for persons who cross the frontier frequently or who have been out of the country for less than 24 hours

N Under existing legislation there is no such amount of non-commercial goods brought in by travelers exempted from payment of duties and taxes For as long as the goods are not personal in nature especially brand new duties and taxes are legally payable However the current passenger baggage declaration form requires the traveler to check either the yes or no box on the question whether or not he is bringing into the country has goods procured abroad in excess of $300 The implication seems to be that its only when the amount procured abroad is more than $300 will the traveler be assessed duties and taxes In actual practice this amount of imported goods is tolerated and allowed duty and tax free release

C-1 S1 Need for amendatory law to legalize the practice

Standard 24

P Fuel carried in the normal tanks of the means of transport for private use shall be admitted free of import duties and taxes

N The country being an archipelago travelers do not arrive by road transport A few arrive by pleasure yacht or plane but Customs do not bother with the fuel left in the tanks Very likely these modes of transport would have fully used up their fuel by the time they get to the country due to the long distance traveled and in fact would have to load fuel for the continuance of the travel

C-3 S-3

Standard 25

P The facilities (temporary admission) granted in respect of means of transport for private use shall apply whether the means of transport are owned rented or borrowed by non-residents and whether they arrive with before or after the traveller

N Travelers intending to call in the country by personal planes and yachts must first notify the countrys foreign office or representative office to obtain permission The foreign office in turn would notify the Customs Immigration and Quarantine offices for the needed formalities on arrival The handling by Customs of the travellers personal transport is similarly with those of commercial transport which procedure

180

does not discriminate as to ownership of the mode of transport but the legislation does not say so or is silent as well

C-3 S-3


P The Customs should not require a Customs document or security for the temporary admission of non-residents means of transport for private use

N Travelers arriving by boat or aircraft are required to make pre-arrival notification in order that the mode of transport may be placed under guard or some form of customs control Other than submission of a General Declaration there are no other Customs documents required such as an entry or a security However the practice is not supported by legislation

C-3 S-3


P Where a Customs document or security is required for the temporary admission of non-residents means of transport for private use the Customs should accept standard international documents and securities

N The country is not a signatory to any of the Customs Convention on the temporary importation for private use of aircraft and pleasure boats So should a situation arise when a yacht or an aircraft be required a document or a security to be given temporary admission these international documents are not recognized by Phil Customs However there is nothing that would prevent Customs from making use of these international documents

C-3 S-3

Standard 28

P Where it is necessary to lodge a temporary admission declaration for temporary admission of non-residents means of transport for private use the time limit for temporary admission shall be fixed by reference to the length of the non-resident s stay in the country provided that any limit laid down in national legislation is not exceeded

N It may become necessary for a temporary admission declaration when the means of transport will be moving in the country away and or not subject to customs control Legislation is silent on the length of stay but normally set at not more than 6months because re-export bonds have that time limit

C-3 S-3

181

Standard 29

P At the request of the person concerned and for reasons deemed valid by the Customs the latter shall extend the period of temporary admission initially fixed for a non-residents means of transport for private use provided that any time limit laid down in national legislation is not exceeded

N There is no legislation setting time limits to temporary admission so for as long as the reason is valid the period maybe extended

C-3 S-3


P The Customs shall allow non-residents temporarily admitted goods to be re-exported through a Customs office other than that through which they were imported

N This requires system on top of enabling regulation that BOC currently does not have No central database which is visible in all customs stations

C-3 S-3




C-3 S-3


P Information concerning the Customs facilities applicable to travellers should be made available in the official language or languages of the country concerned and in any other language deemed to be useful

N No information available covering the standards in the RKC

C-3 S-3 Draft CMO on Facilities Available to Travelers in a QampA style

182


N Current National legislation is silent on all the below standards and practices

S MOU with Postal Service and the CAO-CMO must be amended to be clearly aligned and be compliant with Specific Annex J Chapter 2 of the RKC bull Principle of speed must be recognized as paramount in the clearance

process bull Post Service must be recognized as a regular channel for conveyance of

imports and exports and whatever may be the customs procedure utilized bull Define which consignments maybe released by the Postal Service directly

without Customs intervention and which one needs regular customs processing

Clearance of postal items Standard 3

P The clearance of postal items shall be carried out as rapidly as possible C-3 S-3 This principle must be expressly provided in the Customs Postal Manual

a Customs status of goods Standard 4

P The exportation of goods in postal items shall be allowed regardless of whether they are in free circulation or are under a Customs procedure

N bull In general use of Post for exports is allowed bull However regulations must be issued to cover exports thru post of controlled

and regulated exports such as those subject to clearances permitslicensesauthorizations as well as those from customs controlled facilities

C-3 S-3

Standard 5

P The importation of goods in postal items shall be allowed irrespective of whether they are intended to be cleared for home use or for another Customs procedure

N bull There is no restriction on the use of Post for imports for home use or other customs procedures

bull However regulations must be issued to cover imports into customs controlled

facilities C-3 S-3

183

c Clearance against forms CN22 or CN23 or against a Goods declaration Standard 9

P When all the information required by the Customs is available from the CN22 or CN23 and supporting documents the form CN22 or CN23 shall be the Goods declaration except in the case of bull goods having a value exceeding an amount specified in national legislation bull goods which are subject to prohibitions or restrictions or to export duties and

taxes bull goods the exportation of which must be certified bull imported goods intended to be placed under a Customs procedure other than

clearance for home use In these cases a separate Goods declaration shall be required

C-1 S-1 These forms not allowable under the law But this is a good reason to amend the

law Postal items in transit Standard 10

P Postal items shall not be subject to Customs formalities whilst they are being conveyed in transit

N Transhipments (Transit involving change of carriers) currently go to some form of Customs formalities For example a transhipment application form is required of the transportation company But these formality may be done away with once the needed IT system is set in place

C-1 S-1

Collection of duties and taxes Standard 11

P The Customs shall make the simplest possible arrangements for the collection of duties and taxes on the goods contained in postal items


law

Chapter 3 Means of transport for commercial use Chapter 3 of Annex J deals with the temporary admission procedures of means for commercial transport of goods Temporary admission means the Customs procedure under which vehicles vessels or aircrafts may be introduced into a Customs territory conditionally relieved from payment of import duties and taxes

184

The archipelagic geography of the country extremely limits the situations for operators of means of transport to avail of temporary admissions unlike in countries with common land borders where means of transport under multilateral or bilateral arrangements may move within the territory of countries other than the country of registration of the means of transport In the case of tourism or exhibition ships calling at different ports in the country the usual control mechanism is for customs officers to be assigned on board for the duration of the transportations stay in country Principles Recommended Practice 2

P Customs formalities applicable to means of transport for commercial use should apply equally regardless of the country of registration or ownership of the means of transport for commercial use of the country in which they arrived or their country of destination

C-3 S-3 Should be included in the general announcement for compliance thru an EO

following deposit of instrument of accession Arrival Standard 10

P The Customs shall reduce as far as possible the number of copies of the declaration of arrival required to be submitted to them

N Customs is about to implement 100 electronic submission of cargo manifest which will eliminate paper manifest altogether The data structure of the electronic manifest would already have all the data elements of the general declaration Opportunity is present to remove altogether the general declaration

C-1 S-1 Also it would improve the quality of the countrys compliance to the RKC if a

statement of general principles to reduce formalities and documentary requirements to the minimum submission to achieve control objectives

Standard 11

P No documents to be produced to or lodged with the Customs in connection with the arrival of means of transport for commercial use shall be required to be legalized verified authenticated or previously dealt with by any representatives abroad of the country into which means of transport for commercial use arrive

N Legislation is silent but this is actually being observed C-3 S-3

185


P Where means of transport for commercial use call at subsequent places in the Customs territory without intermediate calls in another country the applicable Customs formalities shall be kept as simple as possible and shall take into account any Customs control measures already taken



P Customs formalities applicable upon the departure of means of transport for commercial use from the Customs territory shall be limited to measures to ensure that bull where required a declaration of departure is duly lodged with the competent

Customs office bull where appropriate Customs seals are affixed bull where required for control purposes specified Customs routes are followed

and bull no unauthorized delay occurs in the departure of means of transport for

commercial use N Sections 1019 and 1111 provide the requirements for the clearance of vessels and

aircrafts respectively for foreign The conditions and the submissions required are more than what this standard required There is a need to review the requirements and align the same to international standards and best practices Other measures may partake of a selective and risk based enforcement measure based on available information

C-1 S-3


P The use of declaration of departure forms identical to those prescribed for declaration of arrival forms (general declarations) should be allowed by the Customs provided that their use for purposes of departure is clearly indicated

N bull Efforts are currently underway to align these forms to formats prescribed in the Conventions on Facilitation of International Maritime Traffic (country is non-signatory) and the Convention of International Civil Aviation (signatory)

bull However while Sections 1111 (departure) and 1105 (arrival) for aircrafts are

almost identical to each other both are different from the maritime forms (Section 1019 for departure and 1004 for arrival which are likewise different from each other

C-1

186

S-1 We should do our best to amend the law to align with this standard

Chapter 4 Stores Strategy Accept this Annex and issue CMOs on Ship Stores providing for these except for Recommended Practice 4 which is not applicable Principles Recommended Practice 2

P Customs treatment of stores should apply equally regardless of the country of registration or ownership of vessels aircraft or trains

N Although the Preamble Section 2 of Article II and Section 1 of Article III of the 1987 Constitution mention equality among nations this particular standard is not directly provided under national legislation

C-3 Legislation is silent S-4 Particularly highlight in the proposed executive order on the general announcement

of RKC accession to clearly demonstrate compliance b Documentation Standard 6

P When a declaration concerning stores on board vessels arriving in the Customs territory is required by the Customs the information required shall be kept to the minimum necessary for the purposes of Customs control

C-3 S-3


P The quantities of stores which are allowed by the Customs to be issued from the stores held on board should be recorded on the declaration concerning stores produced to the Customs upon arrival of the vessel in the Customs territory and no separate form should be required to be lodged with the Customs in respect thereof

C-3 S-3


P The quantities of stores which are supplied to vessels during their stay in the Customs territory should be recorded on any declaration concerning stores which has been required by the Customs

C-3 S-3

187

Standard 9

P The Customs shall not require the presentation of a separate declaration of stores remaining on board aircraft

C-3 S-3

c Issue of stores for consumption Standard 10

P The Customs shall allow the issue of stores for consumption on board during the stay of a vessel in the Customs territory in such quantities as the Customs deem reasonable having regard to the number of the passengers and the crew and to the length of the stay of the vessel in the Customs territory

C-3 S-3


P The Customs should allow the issue of stores for consumption on board by the crew while the vessel is undergoing repairs in a dock or shipyard provided that the stay in a dock or shipyard is considered to be of reasonable duration

C-3 S-3


P When an aircraft is to land at one or more airports in the Customs territory the Customs should allow the issue of stores for consumption on board both during the stay of the aircraft at such intermediate airports and during its flight between such airports

C-3 S-3

d Customs control Standard 13

P The Customs shall require the carrier to take appropriate measures to prevent any unauthorized use of the stores including sealing of the stores when necessary

C-3 S-3

188

Standard 14

P The Customs shall require the removal of stores from the vessel aircraft or train for storage elsewhere during their stay in the Customs territory only when they consider it necessary

C-3 S-3


P No separate declaration concerning stores should be required upon departure of vessels from the Customs territory

C-3 S-3

Standard 19

P When a declaration is required concerning stores taken on board vessels or aircraft upon departure from the Customs territory the information required shall be kept to the minimum necessary for the purpose of Customs control

C-3 S-3


P Stores on board vessels aircraft and trains having arrived in the Customs territory shall be allowed

(a) to be cleared for home use or to be placed under another Customs procedure subject to compliance with the conditions and formalities applicable in each case or

(b) subject to prior authorization by the Customs to be transferred respectively to other vessels aircraft or trains in international traffic

C-3 S-3


Recommendations

bull Accept Chapter 5 of Specific Annex J bull Issue Joint Order Among DSWD DOF and BOC

o mandating the priority treatment of relief goods during the period of the emergency o calling for the observance of the standards and recommended practices and

189

o putting in place the enabling systems such as release under simplified goods declaration and advance clearance

o institution of controls to prevent abuse such as Accreditation of Relief Organizations Duration of the Period of the Emergency within which the special

procedures maybe availed of Procedure and Controls in the transfer from Customs and DSWD Designation of Warehouses where the goods are to be transferred and

processed for distribution Principles Standard 2

P Clearance of relief consignments for export transit temporary admission and import shall be carried out as a matter of priority

N Legislation is Silent Include in General Announcement of RKC accession to clearly demonstrate compliance

C-3 S-4

Standard 3





bull examination andor sampling of goods only in exceptional circumstances N bull There is no legislation providing for goods release based on simplified goods

declaration which can also be lodged and processed ahead of goods arrival bull There is nothing that expressly prohibits these bull If BOC allows the System for delivery has either the FIP module or the Informal

Entry as the support system C-3 S-3


P Clearance of relief consignments should be granted without regard to the country of origin the country from which arrived or country of destination

N Legislation is silent Include in General Announcement of RKC accession to clearly demonstrate compliance

C-3

190


P In the case of relief consignments any economic export prohibitions or restrictions and any export duties or taxes otherwise payable should be waived




N Exempted under tax code


Chapter 2 Documentary evidence of origin Requirement of documentary evidence of origin Recommended Practice 2

P Documentary evidence of origin should be required only when it is necessary for the application of preferential Customs duties of economic or trade measures adopted unilaterally or under bilateral or multilateral agreements or of measures adopted for reasons of health or public order

N While legislation is silent practice is compliant with this recommendation Preferential CO is a supporting document when a preferential rate is applied for Other situations requiring documentary evidence is on a when required basis It would be better if regulations clearly state this

C-3 S-3


P Documentary evidence of origin should not be required in the following cases bull goods sent in small consignments ad dressed to private individuals or carried

in travellers baggage provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$100

bull commercial consignments the aggregate value of which does not exceed an amount which shall not be less than US$60

bull goods granted temporary admission bull goods carried in Customs transit bull goods accompanied by a regional appellation certificate as well as certain bull specific goods where the conditions to be met by the supplying countries

191

under bilateral or multilateral agreements relating to those goods are such that documentary evidence need not be required


N Rule 14 of CEPT-AFTA exempts less than $ 200 For many of the above situations however no legislation has been issued Its advisable to issue these

C-3 S-3


P When rules relating to the requirement of documentary evidence of origin have been laid down unilaterally they should be reviewed at least every three years to ascertain whether they are still appropriate in the light of changes in the economic and commercial conditions under which they were imposed

N No legislation issued C-3 S-3

Applications and form of the various types of documentary evidence of origin a Certificate of origin Form and content Recommended Practice 6

P When revising present forms or preparing new forms of certificates of origin Contracting Parties should use the model form in Appendix I to this Chapter in accordance with the Notes in Appendix II and having regard to the Rules in Appendix III Contracting Parties which have aligned their forms of certificate of origin on the model form in Appendix I to this Chapter should notify the Secretary General of the Council accordingly

N bull For preferential COs the agreement prescribes the forms bull For regular COs CMO27-2004 is silent on the form and it would be advisable to

clearly provide in the covering regulation a form aligned with the format recommended in the RKC

C-3 S-3

192


P Where the certificate of origin is made out in a language that is not a language of the country of importation the Customs of that country should not require as a matter of course a translation of the particulars given in the certificate of origin

N Legislation is Silent C-3 S-3 Only when it will help in the proper assessment and facilitate clearance should

translation be required Authorities and other bodies empowered to issue certificates of origin Recommended Practice 10

P Where goods are not imported directly from the country of origin but are forwarded through the territory of a third country certificates of origin should be allowed to be drawn up by the authorities or bodies empowered to issue such certificates in that third country on the basis of a certificate of origin previously issued in the country of origin of the goods

N Legislation is Silent but it is advisable to include this in the regulationsorders C-3 S-3


P Where documentary evidence of origin is required a declaration of origin should be accepted in the following cases

(a) goods sent in small consignments addressed to private individuals or carried in travellers baggage provided that such importations are of a non-commercial nature and the aggregate value of the importation does not exceed an amount which shall not be less than US$500

(b) commercial consignments the aggregate value of which does not exceed an amount which shall not be less than US$300


N Legislation is silent It would be advisable to issue legislation and only if there is ground to suspect the declaration should a formal CO following the retroactive verification route under CMO 27-2004 be resorted to

C-3 S-3

193

Annex E 05 February 2007 Her Excellency GLORIA MACAPAGAL-ARROYO President Republic of the Philippines Malacantildean Manila Philippines

rsquo

Subject Philippine Accession to and Compliance with the Revised International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention or RKC)

Dear Madam President We leaders of industries stakeholders of the trading community and clients of the Bureau of Customs have studied the various standards and recommended best practices of the revised International Convention on the Simplification and Harmonization of Customs Procedures otherwise known as the Revised Kyoto Convention (RKC) which came to force on 03 February 2006 after India became the 40th Contracting Party to ratify the Protocol of Amendments and strongly believe that the country should adopt and implement a medium and long-term strategy for compliance with the provisions of the Convention and immediately seal our commitment to foster efficiency transparency and accountability in Customs administration while contributing to reduced transaction costs and enhanced trade security by acceding to the RKC Efficient cross border procedures and customs services are critical to the countryrsquos efforts to enhance competitiveness not only in international trade but also in attracting foreign investments urgently required to generate jobs and other economic opportunities for our people We are completely convinced that accession to the RKC is an effective and emphatic means of communicating to our global partners the countryrsquos steadfast resolve not only to facilitate trade but also to continuously improve the Philippine business climate And that we are ready to do global business We are also confident that the countryrsquos accession to RKC and subsequent compliance with its provisions will most definitely facilitate movement of goods and people and expedite import-export and all other related cross-border transactions resulting in benefits for everyone farmers traders manufacturers service enterprises utilities and finally consumers Equally important more than just helping provide the Bureau of Customs a reputation of a facilitating and caring organization compliance with RKC provisions will enhance effectiveness of its regulatory and control functions towards achieving vital customs administration objectives (eg revenue generation safeguarding national security protecting public health and safety protection of natural resources and the environment etc) While we believe that the country should try to comply with most if not all of the conventionrsquos provisions we recognize that compliance with some standards and recommended best practices of the Specific Annexes will require amendment of existing laws and the modification of certain administrative policies as well as the development of enabling ICT and other systems activities that may take some time to complete With accession the government may have to enter its reservations on certain recommended practices or even temporarily set aside acceptance of whole Annexes or Chapters thereof In this connection we respectfully endorse the attached Country Strategy for RKC Compliance which represent the collective view of a multi-sectoral group for consideration of the Government under Her Excellencyrsquos insightful leadership And towards ensuring eventual compliance we pledge not only our willingness to

194

undertake persistent advocacy but where necessary contribute human and other essential resources required We look forward to Her Excellencyrsquos immediate and kind response to our recommendation for accession to the RKC Very faithfully yours

PHILIPPINE CHAMBER OF COMMERCE AND INDUSTRY

PHILIPPINE EXPORTERS CONFEDERATION INC

FEDERATION OF PHILIPPINE INDUSTRIES INC

FEDERATION OF FILIPINO-CHINESE CHAMBERS OF COMMERCE AND

INDUSTRIES INC

MANAGEMENT ASSOCIATION OF THE PHILIPPINES

MAKATI BUSINESS CLUB

BANKERS ASSOCIATION OF THE PHILIPPINES

CHAMBER OF COMMERCE OF THE PHILIPPINES FOUNDATION

EXPORT DEVELOPMENT COUNCIL NETWORKING COMMITTEE

TASK FORCE ON PHILIPPINE COMPETITIVENESS

PORT USERS CONFEDERATION INC

FEDERATION OF ACCREDITED CUSTOMS BROKERS

AND FORWARDERS INC

CHAMBER OF CUSTOMS BROKERS INC

AIRCARGO FORWARDERS ASSOCIATION OF THE PHILIPPINES

ASSOCIATION OF INTERNATIONAL SHIPPING

LINES

PHILIPPINE INTERNATIONAL SEAFREIGHT FORWARDERS

ASSOCIATION

195

CONFEDERATION OF TRUCKERS ASSOCIATION

OF THE PHILIPPINES

ECOZONE FEDERATION OF FORWARDERS TRUCKERS AND

BROKERS OF THE PHILIPPINES

COMMON BONDED WAREHOUSE OPERATORS INC

ASSOCIATION OF OFF-DOCK CFS OPERATORS

DOOR-TO-DOOR CONSOLIDATORS ASSOCIATION OF THE PHILIPPINES

CUSTOMS CHECKERS AND REPRESENTATIVES ASSOCIATION

INC

PHILIPPINE INTEGRATED IMPORT-EXPORT INC

FOREIGN BUYERS ASSOCIATION OF THE PHILIPPINES

SEMI-CONDUCTORS AND ELECTRONICS INDUSTRIES

IN THE PHILIPPINES INC

FEDERATION OF CUSTOMS BROKERAGE

COMPANIES

ASSOCIATION OF TRANSSHIPMENT OPERATORS OF

THE PHILIPPINES

NDUCTORS ONICS INDUSTRIES


PHILIPPINE CHAMBER OF AIR EXPRESS OPERATORS

196

ANNEX F

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF CUSTOMS

MANILA 1099 05 February 2007 Honorable MARGARITO B TEVES Secretary Department of Finance Roxas Boulevard Manila Philippines Subject Philippine Accession To and Compliance With the Revised International Convention on the

Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention or RKC)

Dear Secretary Teves The Bureau of Customs respectfully recommends the countryrsquos accession to the Revised Kyoto Convention and the adoption and implementation of the attached Country Strategy for RKC Compliance which was formulated by a multi-sectoral group consisting of representatives of business organizations and the academe and with the active involvement of BOC officials and personnel It will be recalled that the countryrsquos accession to and compliance with the RKC was one of the major recommendations submitted to the President late last year by the Summit on National Competitiveness In 1973 the Customs Cooperation Council (CCC) the predecessor of the World Customs Organization (WCO) adopted the International Convention on the Simplification and Harmonization of Customs Procedures otherwise known as the ldquoKyoto Conventionrdquo aimed at simplifying and harmonizing customs procedures The Kyoto Convention came into force in 1974 with 62 original Contracting Parties

After the Kyoto Convention came into force the pattern of and environment for international trade underwent dramatic changes as a result of increased globalization of trade rapid growth in international cargo severe competition for foreign investments establishment of the World Trade Organization (WTO) and regional trading arrangements such as APEC and AFTA reduction of tariffs and elimination of non-tariff barriers dynamic growth and development of ICT technology and advancement in e-commerce and increased focus on trade security Consequently with traditional Customs administration practices and procedures becoming regarded as non-tariff barriers WTO called for simplification and harmonization of Customs procedures as a key to trade facilitation In June 1999 the WCO responded with the adoption by 114 customs administrations attending its 94th Session of the Revised Kyoto Convention which reflects the economic and technological changes and incorporates best practices of member administrations The RKC came into force 03 February 2006 three months after India became the 40th original Contracting Party to signratify the Protocol of Amendment As a result of the RKCrsquos coming into force it is now open for accession by countries who were not Contracting Parties to the original Kyoto Convention

RKC is designed to promote international trade by prescribing modern simplified and harmonized Customs procedures as well as standards and best practices which will enable Customs to respond to major changes in business and administrative methods and techniques towards facilitating and reducing

197

the cost of cross-border transactions fostering administrative transparency and efficiency and enhancing trade security without sacrificing achievement of customs objectives of revenue generation and protection of national security public health and safety natural resources and the environment

Compliance with the RKC will specifically and directly benefit traders and manufacturers because of improved facilitation and reduced cost shippers and transport operators will appreciate uniform Customs controls and quicker movement of cargoes and people and the government will realize increased border security and enhanced revenue collection efficiency The following are some of the specific advantages derived from trade with RKC compliant countries

bull Harmonized customs procedures instead of 140 disparate national customs procedures bull Reduced time and cost of clearing customs bull Greater understanding of compliance requirements leading to increased transparency and

predictability in customs transactions and elimination of discretionary treatment and application of rules and regulations

bull Implementation of special procedures for low-risk importers bull Reduced opportunities for extortion of facilitationgrease payments thereby paving the

smooth transition to increased transparency and automation

Recognizing the benefits that will result from accession and compliance with the RKC the Bureau of Customs convened a Kyoto Convention Management Team (KCMT) to undertake the following

1 Analyze applicability of RKC provisions to the Philippines taking into consideration the

countryrsquos development status and needs

2 Determine which standards transitory standards and recommended practices in the RKC General and Specific Annexes vis-agrave-vis the countryrsquos existing National Legislation is compliant or not compliant with

3 Formulate measures to be undertaken to make Philippine National Legislation compliant with

said standards transitory standards and recommended practice

4 Recommend how the Philippines should accede to the RKC (ie identify which Specific Annexes should be immediately accepted and those the country should indicate reservations on)

The KCMT assisted by a multi-sectoral group consisting of representatives of private sector organizations and the academe has validated that compliance with the provisions of the RKC will deliver the benefits enumerated above The KCMT also recommends that the Philippines accede to the RKC to signify and seal the countryrsquos commitment to comply with its provisions By acceding the Philippines will be sending a clear message to both the international trade community and governments around the world that the Philippines stands firmly behind customs procedures that facilitate the secure movement of legitimate trade across national borders and that the public and private sector truly can work together to facilitate trade and that trade and security are not mutually exclusive and will present a significant step forward in the promotion of economic growth national security and customs integrity at both the national and international levels Acceding to the RKC will also provide the following advantages

bull Prevent passage or issuance of National Legislation (revision of Customs Code Issuance of

PDs and EOs and Administrative Orders CAOs and CMOs) that are against the principles and provisions of the RKC

bull Establishment of a solid foundation for reforming and strengthening the countryrsquos legislative

base a very important first step in reforming the BOC and related institutions (Note

198

Eliminating the gaps between RKC and the existing National Legislation can be the Action Program of a Joint Business-Congressional-DOF-BOC Reform Agenda)

bull Establishment of a benchmark for assessing the status of the countryrsquos trade efficiency and

competitiveness We are also convinced that the countryrsquos accession to the RKC is the most effective and also least expensive way of declaring to the global community that the countryrsquos business climate and environment favorably compares with the best in the world We urgently wish to make the Philippines to be the first ASEAN country to accede to the Revised Kyoto Convention In this connection we believe that we can immediately comply with accession requirements through acceptance of the

1 Body of the Convention as amended 2 General Annex

3 Specific Annex A - Arrival of Goods in a Customs Territory Chapter 2 ndash Temporary Storage

of Goods

4 Specific Annex B ndash Importation

a Chapter 1 ndash Clearance for Home Use b Chapter 2 ndash Re-importation in the Same State c Chapter 3 ndash Relief from Import Duties and Taxes

5 Specific Annex C ndash Exportation Chapter 1 ndash Outright exportation 6 Specific Annex E ndash Transit

a Chapter 1 ndash Customs Transit b Chapter 2 ndash Transhipment c Chapter 3 ndash Carriage of Goods Coastwise

7 Specific Annex F ndash Processing Chapter 3 ndash Drawback 8 Specific Annex J- Special Procedures

a Chapter 1 - Travellers b Chapter 2 - Postal Traffic c Chapter 4 ndash Stores d Chapter 5 ndash Relief Consignments

9 Specific Annex K ndash Origin

On the other hand inasmuch as acceptance will require careful in-depth studies and consultations with various stakeholders andor amendment of existing legislations we believe we should defer acceptance of the following Specific Annexes and Chapters

1 Specific Annex A - Arrival of Goods in a Customs Territory Chapter 1 ndash Formalities prior to

the lodgement of the Goods Declaration 2 Specific Annex D ndash Customs Warehouses and Free Zones

3 Specific Annex F ndash Processing

199

a Chapter 1 ndash Inward Processing b Chapter 2 ndash Outward Processing c Chapter 4 ndash Processing of goods for home use

4 Specific Annex G ndash Temporary Admission 5 Specific Annex H ndash Offences

6 Specific Annex J ndash Special Procedures Chapter 3 ndash Means of transport for commercial use

For the same reasons referred to in the preceding paragraph we believe that the country should register reservations on the following Recommended Practices in Specific Annexes we recommended acceptance of

1 Specific Annex A - Arrival of Goods in a Customs Territory a Chapter 2 ndash Temporary Storage of Goods

bull Recommended Practice 10


a Chapter 1 ndash Clearance for Home Use bull Recommended Practice 2

b Chapter 2 ndash Re-importation in the Same State bull Recommended Practice 6 and bull Recommended Practice 7

3 Specific Annex E ndash Transit

a Chapter 3 ndash Carriage of Goods Coastwise

bull Recommended Practice 4 bull Recommended Practice 5 bull Recommended Practice 6 bull Recommended Practice 8 bull Recommended Practice 9 bull Recommended Practice 15 bull Recommended Practice 16


a Chapter 3 ndash Drawback bull Recommended Practice 3 bull Recommended Practice 5 bull Recommended Practice 6 bull Recommended Practice 9 bull Recommended Practice 10

5 Specific Annex J- Special Procedures

a Chapter 1 - Travellers bull Recommended Practice 9 bull Recommended Practice 14 bull Recommended Practice 16 bull Recommended Practice 17

200

Thank you very much for the Secretaryrsquos kind consideration of the BOC recommendations Very truly yours NAPOLEON L MORALES Commissioner

201

Annex G

06 February 2007 Her Excellency GLORIA MACAPAGAL-ARROYO President Republic of the Philippines Malacantildean Manila

Through Honorable ALBERTO G ROMULO

Secretary Department of Foreign Affairs

Subject Department of Finance Endorsement of the BOC Recommendation on the Adoption and Implementation of the National Strategy for Accession to and Compliance with the Revised International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention or RKC)

Madam President The Department of Finance is respectfully endorsing for the kind consideration of the President the attached letter of BOC Commissioner Napoleon L Morales dated 05 February 2007 on the above-mentioned subject which was submitted to me during this morningrsquos ceremony commemorating the 105th Anniversary of the founding of the Bureau (Attachment A) The BOC recommendation is overwhelmingly supported by various relevant private sector business organizations as indicated in their joint letter to the President dated 05 January 2007 which was presented to the DOF Undersecretary Gil Beltran during the National Summit on the Revised Kyoto Convention yesterday (Attachment B) Hoping that the President would favorably consider the BOC recommendation and the DOF endorsement of it we have taken the liberty of preparing and submitting for the Presidentrsquos further consideration the following draft documents

bull Instrument of Accession (Attachment C) bull Presidentrsquos Letter to the Philippine Senate endorsing the Instrument of Accession for confirmation

(Attachment D) and bull Summary of Applicability and Gap Analysis as support document to the Instrument for Accession

(Attachment E) We firmly believe that accession to and compliance with the RKC will be hailed as one of the most important milestones in the relentless efforts of President Arroyorsquos Administration to put the country prominently back in the global map of competitiveness in international trade and investments Very truly yours MARGARITO B TEVES Secretary

202

Annex H Annex An

INSTRUMENT OF ACCESSION

TO ALL TO WHOM THESE PRESENTS SHALL COME GREETINGS KNOW YE that whereas the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention) was adopted in Kyoto on 18 May 1973 and entered into force on 25 September 1974 WHEREAS on 3 February 2006 the amended Convention and the Protocol of Amendment to the Convention which was done in Brussels on 26 June 1999 entered into force three months after the 40th Contracting Party ratified the Protocol and the amended Convention WHEREAS the Revised Kyoto Convention aims to (a) eliminate divergence between the Customs procedures and practice of contracting parties that can hamper international trade and other international exchanges (b) meet the needs of international trade and the Customs for facilitation simplification and harmonization of Customs procedures and practices (c) ensure appropriate standards of Customs control and (d) enable the Customs to respond to major changes in business and administrative methods and techniques WHEREAS Article 8 (1) of the Convention provides that ldquoany Member of the Council and any Member of the United Nations or its specialized agencies may become a Contracting Party to this Convention by (a) signing it without reservation of ratification (b) depositing an instrument of ratification after signing it subject to ratification or (c) acceding to itrdquo WHEREAS the Philippines is a member of the World Customs Organization Council and also of the United Nations and thereby may become a Contracting Party to the Revised Kyoto Convention by acceding to it WHEREAS the Philippines shall observe and comply with the terms of its accession and apply the same within the bounds of the territory within which the Government of the Philippines exercises sovereignty NOW THEREFORE be it known that I GLORIA MACAPAGAL-ARROYO President of the Republic of the Philippines after having seen and considered the aforementioned International Convention on the Simplification and Harmonization of Customs Procedures as amended do hereby accept accede to and agree to be bound by the Body of the Convention and any amendments thereto General Annex and the following Specific Annexes andor Chapters of Specific Annexes subject to reservations on certain Recommended Practices enumerated in the succeeding paragraph

bull Specific Annex A - Arrival of Goods in a Customs Territory bull Specific Annex B ndash Importation bull Specific Annex C ndash Exportation bull Specific Annex E ndash Transit bull Specific Annex F ndash Processing Chapter 3 ndash Drawback bull Specific Annex J- Special Procedures

Chapter 1 - Travellers Chapter 2 - Postal Traffic Chapter 4 ndash Stores Chapter 5 ndash Relief Consignments

bull Specific Annex K ndash Origin

BE IT FURTHER KNOWN THAT considering that there are existing laws andor policies which are in direct conflict with some Recommended Practices in Specific Annexes and that in-depth

203

rethinking of policies andor amendment of existing laws will be required for acceptance and compliance we hereby make reservations on acceding to the following

Specific Annex A - Arrival of Goods in a Customs Territory

Chapter 1 ndash Formalities Prior to the Lodgement of the Goods o Recommended Practice 9 o Recommended Practice 10 o Recommended Practice 12

Chapter 2 ndash Temporary Storage of Goods o Recommended Practice 10

Specific Annex B ndash Importation Chapter 1 ndash Clearance for Home Use

o Recommended Practice 2

Chapter 2 ndash Re-importation in the Same State o Recommended Practice 6 and o Recommended Practice 7

Specific Annex E ndash Transit Chapter 3 ndash Carriage of Goods Coastwise o Recommended Practice 4 o Recommended Practice 5 o Recommended Practice 6 o Recommended Practice 8 o Recommended Practice 9 o Recommended Practice 15 o Recommended Practice 16

Specific Annex F ndash Processing Chapter 3 - Drawback o Recommended Practice 3 o Recommended Practice 5 o Recommended Practice 6 o Recommended Practice 9 o Recommended Practice 10

Specific Annex G ndash Temporary Admission Chapter 1 ndash Temporary Admission o Recommended Practice 9 o Recommended Practice 10 o Recommended Practice 14 o Recommended Practice 19

Specific Annex J- Special Procedure Chapter 1 ndash Travellers o Recommended Practice 9 o Recommended Practice 14 o Recommended Practice 16 o Recommended Practice 17

IN TESTIMONY WHEREOF I have hereunto set my hand and caused the seal of the Republic of the Philippines to be affixed GIVEN under my hand at the City of Manila on this ______ day of ________________ in the year of Our Lord two thousand seven

204

Annex I

MALACANtildeAN PALACE

MANILA February 2007 The HONORABLE MEMBERS Senate Through Senate President MANUEL VILLAR Ladies and Gentlemen I have the honor to forward herewith a copy of the Instrument of Accession to the Revised International Convention on the Simplification and Harmonization of Customs Procedures otherwise known as the Revised Kyoto Convention (RKC) which I signed this ____ day of ________________ 2007 With this Instrument of Accession to the RKC the Philippines agrees to accept comply with and be bound to within the territories the Philippines exercises sovereignty following

1 Body of the Revised Kyoto Convention as amended 2 General Annex

3 Specific Annex A Arrival of Goods in a Customs Territory

a Chapter 1 ndash Formalities Prior to the Lodgement of the Goods Declaration b Chapter 2 ndash Temporary Storage of Goods



5 Specific Annex C Exportation Chapter 1 ndash Outright Exportation 6 Specific Annex E Transit

a Chapter 1 ndash Customs Transit b Chapter 2 ndash Transshipment c Chapter 3 ndash Carriage of Goods Coastwise

7 Specific Annex F Processing Chapter 3 ndash Drawback 8 Specific Annex G Temporary Admission Chapter 1 ndash Temporary Admission


a Chapter 1 ndash Travellers b Chapter 2 -- Postal Traffic c Chapter 4 ndash Stores d Chapter 5 ndash Relief Consignments

205


On the other hand considering that acceptance will require careful in-depth studies and consultations with various stakeholders andor amendment of existing legislations through the Instrument of Accession we are making reservations on the following Specific Annexes andor Chapters andor Recommended Practices thereof

1 Specific Annex A Arrival of Goods in a Customs Territory a Chapter 1 ndash Formalities Prior to the Lodgement of the Goods Declaration

1) Recommended Practice 9 2) Recommended Practice 10 3) Recommended Practice 12

b Chapter 2 ndash Temporary Storage of Goods Recommended Practice 10

2 Specific Annex B ndash Importation a Chapter 1 ndash Clearance for Home Use Recommended Practice 2 b Chapter 2 ndash Re-importation in the Same State

1) Recommended Practice 6 and 2) Recommended Practice 7


a Chapter 3 ndash Carriage of Goods Coastwise 1) Recommended Practice 4 2) Recommended Practice 5 3) Recommended Practice 6 4) Recommended Practice 8 5) Recommended Practice 9 6) Recommended Practice 15 7) Recommended Practice 16

4 Specific Annex F ndash Processing Chapter 3 ndash Drawback

a Recommended Practice 3 b Recommended Practice 5 c Recommended Practice 6 d Recommended Practice 9 e Recommended Practice 10

5 Specific Annex G ndash Temporary Admission Chapter 1 - Temporary Admission a Recommended Practice 9 b Recommended Practice 10 c Recommended Practice 14 d Recommended Practice 19

6 Specific Annex J - Special Procedures Chapter 1 - Travellers

a Recommended Practice 9 b Recommended Practice 14 c Recommended Practice 16 d Recommended Practice 17

RKC is designed to promote international trade by prescribing modern simplified and harmonized Customs procedures as well as standards and best practices which will enable Customs to respond to major changes in business and administrative methods and techniques towards facilitating and reducing the cost of cross-border transactions fostering administrative transparency and efficiency and enhancing trade security without sacrificing achievement of customs objectives of revenue generation and protection of national security public health and safety natural resources and the environment

206

Compliance with the RKC will specifically and directly benefit traders and manufacturers with improved facilitation and reduced cost shippers and transport operators will appreciate uniform Customs controls and quicker movement of cargoes and people and the government will realized increased border security and enhanced revenue collection efficiency Trading with RKC compliant countries will generate with the following specific advantages





By acceding the Philippines will be sending a clear message to both the international trade community and governments around the world that the Philippines stands firmly behind customs procedures that facilitate the secure movement of legitimate trade across national borders and that the public and private sectors truly can work together to facilitate trade and that trade and security are not mutually exclusive and will present a significant step forward in the promotion of economic growth national security and customs integrity at both the national and international levels Acceding to the RKC will also provide the following advantages

bull Prevent passage or issuance of National Legislation (revision of Customs Code Issuance of PDs and EOs and Administrative Orders CAOs and CMOs) that are against the principles and provisions of the RKC

bull Establishment of a solid foundation for reforming and strengthening the countryrsquos legislative base a very important first step in reforming the BOC and related institutions (Note Eliminating the gaps between RKC and the existing National Legislation can be the Action Program of a Joint Business-Congressional-DOF-BOC Reform Agenda)

bull Establishment of a benchmark for assessing the status of the countryrsquos trade efficiency and competitiveness

The countryrsquos accession to the RKC is the most effective way of declaring to the global community that the countryrsquos business climate and environment favorably compares with the best in the world In view of the foregoing pursuant to Section 21 Article VII of the Constitution the Instrument of Accession to the Revised Kyoto Convention together with the Body of the Convention General Annex and Specific Annexes recommended for acceptance by the Philippines are hereby submitted to the Senate for concurrence

Very truly yours

GLORIA MACAPAGAL-ARROYO President

207

S E N A T E

PS RES NO ________

RESOLUTION CONCURRING IN THE ACCESSION TO THE REVISED INTERNATIONAL CONVENTION ON THE

SIMPLIFICATION AND HARMONIZATION OF CUSTOMS PROCEDURES

WHEREAS the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention) was adopted in Kyoto on 18 May 1973 and entered into force on 25 September 1974 WHEREAS the amended Convention and the Protocol of Amendment to the Convention which was done in Brussels on 26 June 1999 has entered into force on 3 February 2006 three months after the 40th Contracting Party ratified the Protocol and the amended Convention WHEREAS the Revised Kyoto Convention aims to (a) eliminate divergence between the Customs procedures and practice of contracting parties that can hamper international trade and other international exchanges (b) meet the needs of international trade and the Customs for facilitation simplification and harmonization of Customs procedures and practices (c) ensure appropriate standards of Customs control and (d) enable the Customs to respond to major changes in business and administrative methods and techniques

WHEREAS the Revised Kyoto Convention is designed to promote international trade by prescribing modern simplified and harmonized Customs procedures as well as standards and best practices which will enable Customs to respond to major changes in business and administrative methods and techniques towards facilitating and reducing the cost of cross-border transactions fostering administrative transparency and efficiency and enhancing trade security without sacrificing achievement of customs objectives of revenue generation and protection of national security public health and safety natural resources and the environment

WHEREAS compliance with the Revised Kyoto Convention will specifically and directly benefit

traders and manufacturers because of improved facilitation and reduced cost shippers and transport operators will appreciate uniform Customs controls and quicker movement of cargoes and people and the government will realized increased border security and enhanced revenue collection efficiency and that trading among Revised Kyoto Convention compliant countries will provide the following specific advantages




smooth transition to increased transparency and automation WHEREAS our accession to the Revised Kyoto Convention will signify and seal the countryrsquos s

commitment to comply with its provisions and will send a clear message to both the international trade community and governments around the world that our country stands firmly behind customs procedures that facilitate the secure movement of legitimate trade across national borders and that the public and private sector truly can work together to facilitate trade and that trade and security are not mutually

208

exclusive and will present a significant step forward in the promotion of economic growth national security and customs integrity at both the national and international level

WHEREAS the President of the Philippines finds it desirable to accede to the Revised Kyoto Convention subject to certain reservations and has accordingly submitted to the Senate for concurrence in accordance with Section 21 Article VII of the Constitution of the Philippines Now therefore be it RESOLVED as it is hereby resolved That the Senate concur as it hereby concurs in the accession by the President of the Philippines subject to specific reservations contained in the Instrument of Accession to the revised International Convention on the Simplification and Harmonization of Customs Procedures otherwise known as the Revised Kyoto Convention

209

EMERGE Preface

This report is the result of technical assistance provided by the Economic Modernization through Efficient Reforms and Governance Enhancement (EMERGE) Activity under contract with the CARANA Corporation Nathan Associates Inc and The Peoples Group (TRG) to the United States Agency for International Development Manila Philippines (USAIDPhilippines) (Contract No AFP-I-00-00-03-00020 Delivery Order 800) The EMERGE Activity is intended to contribute towards the Government of the Republic of the Philippines (GRP) Medium Term Philippine Development Plan (MTPDP) and USAIDPhilippinesrsquo Strategic Objective 2 ldquoInvestment Climate Less Constrained by Corruption and Poor Governancerdquo The purpose of the activity is to provide technical assistance to support economic policy reforms that will cause sustainable economic growth and enhance the competitiveness of the Philippine economy by augmenting the efforts of Philippine pro-reform partners and stakeholders By letter dated 25 November 2005 Fernando P Cala II Executive Director of the Philippine Export Development Council (EDC) requested assistance from EMERGE and the Partnership and Advocacy for Competitiveness and Trade (PACT) which is a grant project implemented for USAID by the DLSU-Angelo King Institute for Economic and Business Studies in partnership with Philippine Exporters Confederation Inc (PhilExport) for research and advocacy about Philippine compliance with the Revised Kyoto Convention (RKC) which was to enter into force on February 3 2006 PACT and EMERGE engaged the Parayno Consultancy Services for this purpose in June 2006 The views expressed and opinions contained in this publication are those of the authors and are not necessarily those of USAID the GRP EMERGE or the latterrsquos parent organizations




Submitted by


February 2007

Abbreviation





TABLE OF CONTENT












Annexes


PREFACE


















i

EXECUTIVE SUMMARY
















ii




















3














Competitiveness






4









110 RKC Structure

1101 General Annex






5



















6






Not



Non-Compliant

Silent Provision









Specific Annex G

7





















8







extent possible




bull Standard 17










9






purchased are paid

32 Gap Analysis




















10


Accession Thereto

331 General Annex




Standard


Standard


Standard





Standard


Standard


Standard


Transitional


Standard


Standard


Standard


Standard

11

examination






Standard


Standard


Transitional








Transitional


Standard

12




Standard


Standard


Standard


Standard




Transitional


Standard


Standard




Standard




Standard

13






Standard




Standard





Standard


Standard


Standard


Standard




14


Standard


Standard


Standard





Standard





Standard


Standard


Standard


Customs



Standard


Standard

15





Standard


Standard


Standard


Standard


Standard


Standard











16






















Standard







17















Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard

18



Standard


Standard


Standard




Standard












19



















20










Standard




Standard












21



Standard


Standard
















Standard


Standard





22





Standard



Customs office

Standard


Standard


Standard




Standard




Standard





Standard

23
















Standard


Standard


Standard



escort

Standard


Standard



24






Standard


Standard






Standard


Standard








25



Standard


Standard




Standard


Standard




Standard


Standard








Standard



26


Standard




Standard




Standard


Standard





Standard





27






















28






Standard




Standard


Standard





Standard




Standard







29
















Standard




Standard


Standard





30



Standard


Standard




Standard


Standard


Standard


Standard


Standard


Standard







31

















Standard









32























33




Standard


Standard







temporary admission



Standard


Standard





Standard











34














Standard






Standard










35



Standard












Standard


Standard


Standard











36
















Standard









37
















Standard





Standard




Standard

38






d Chapter 4 Stores







Standard








Standard


Standard




Standard

39







Standard






Standard














40




















41








Standard



41 Background











42












bull 1st Stage


bull 2nd Stage


bull 3rd Stage





43
























44















50 Investment Plan

51 Objectives





Set


Advocacy Website


Php 200000000

45










500000000








Others

500000000


500000000





300000000


46

Annex ldquoArdquo













Errors Standard 339





47












N TCCP Sec 701 702 703

48



N TCCP Sec 3506











49

















50













Standard 322





51


Standard 323



Standard 326











52








Errors Standard 339



53














54














Standard 42


55


Standard 43




Standard 45



Standard 46 Payment



Standard 47





Standard 411


56

Standard 412












57






Standard 424



Chapter 5 Security

Standard 51



Standard 52





58

Standard 53



Standard 54



Standard 55




Standard 61



Standard 62



59

Standard 63




N same Standard 66




N E-Commerce Act



Standard 82





60




Standard 87



61

Annex B


















62







1a 1b 2 3 4 5


S 1 2 3 4







63








C-3 S-3








64






C-1 S-1

Standard 325








C-3 S-1

65








C-2











66








Special Procedure 1





67

Special Procedure 2








C-24


68






C-3







69










Standard 337



70












71















72



C-3

S Same as above

Standard 422


C-3

S Same as above

Chapter 5 Security

Standard 56




Standard 57



73





Standard 65






Standard 67



C-3 S4

Standard 68


74











Standard 72



75


Standard 73



Standard 74










Standard 81



76


S Standard 83



Standard 84


C-3







77




Standard 92






78


79

Annex C












Charges Standard 19












80






















Duration of stay

81






















82





















83















84

Arrival Standard 9





















85
















86










Standard 5



Standard 6


87



Standard 8









88
















89

Charges Standard 19









Standard 2







90













N Sections 1801-02

91












92









Standard 3


Standard 4


Standard 5


93

Standard 6


Standard 7













94

Standard 3






Standard 5




Strategy








95




Strategy









96













N Section 1905

97















98

Standard 7




Standard 8








Standard 12



99











Standard 17



100





Standard 20










101












Standard 10




102










Standard 24







103













104


















105














106





107





Standard 5










Standard 9


108





Standard 12











109







Standard 24




Chapter 3 Drawback




110










111

Standard 3












112





Standard 13










113





Overall Strategy







Standard 3



Standard 4




114







Standard 7





Standard 8



115













Standard 12


116


Standard 13














117







Standard 22









118

Standard 24



Standard 26













119







C-3 S-4

Standard 3









120








Standard 11



Standard 12



121

Standard 13



Entry Standard 18



Standard 19



Standard 20





122




Standard 22





Standard 30








123




Standard 35



Standard 36









124





Standard 7









125




Standard 4



Standard 5






126














127










Standard 16



128

Standard 17
















129












130
















131

















132





Standard 11










133















134








Standard 5








135

Standard 7



Standard 8












136

Standard 13



137

Annex D



1a 1b 2 3 4 5


S 1 2 3 4 5












138






















139






















Standard 4

140




















141





















Departure

142



















143

Standard 8











C-1




144




C-3

S-3







C-3 S-3




145

S-5 Reservation





C-1 S-5












146




C-1 S-5


Strategy










147







Strategy










dock facilities

148















S-5

149









C-3 S-3







150

C-1 S-5


Strategy















151
















152

declaration C-1 S-1
















C-1 S-5



153






C-1 S-5




C-3 S-3







154


S-1 S-5












155




C-3 S-5

Standard 11



C-3 S-3

Standard 12



C-3 S-3



156

















157










158







C-3 S-3







159











C-1 S-5




160

Standard 19






Standard 21








C-1

161





C-1 S-5












162











Standard 3






163










Standard 11


Standard 12


164

Standard 13




Standard 15








Chapter 3 Drawback





procedure

165








subtitutes








166







C-1 S-5







167


C-1 S-1















168






C-1 S-6

Not to Accept





169






C-3 S-3

Standard 6









170

















171










C-3 S-3






172





C-3 S-3








Standard 18



C-3 S-3

173











C-3 S-3




C-3 S-5

174










C-1 S-5



Coverage




Overall Strategy



175





C-3 S-3





C-3 S-3



176





C-1 S-5









C-1 S-5

177

Standard 25














178






C-1











179







Standard 24



C-3 S-3

Standard 25



180


C-3 S-3




C-3 S-3




C-3 S-3

Standard 28



C-3 S-3

181

Standard 29



C-3 S-3




C-3 S-3




C-3 S-3





182













C-3 S-3

Standard 5




facilities C-3 S-3

183









C-1 S-1




law


184









Standard 11



185










C-1 S-3






C-1

186








C-3 S-3



C-3 S-3



C-3 S-3

187

Standard 9


C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3

188

Standard 14


C-3 S-3



C-3 S-3

Standard 19


C-3 S-3





C-3 S-3


Recommendations



189







C-3 S-4

Standard 3











C-3

190











C-3 S-3






191




C-3 S-3








C-3 S-3

192













C-3 S-3

193


rsquo



194






INDUSTRIES INC









AND FORWARDERS INC




LINES


ASSOCIATION

195


OF THE PHILIPPINES







INC






COMPANIES


THE PHILIPPINES




196

ANNEX F







197



















198






of Goods












199

















200


201

Annex G









202

Annex H Annex An







203













204

Annex I













205
















206











Very truly yours


207

S E N A T E

PS RES NO ________












208



209




Submitted by


February 2007

Abbreviation





TABLE OF CONTENT












Annexes


PREFACE


















i

EXECUTIVE SUMMARY
















ii




















3














Competitiveness






4









110 RKC Structure

1101 General Annex






5



















6






Not



Non-Compliant

Silent Provision









Specific Annex G

7





















8







extent possible




bull Standard 17










9






purchased are paid

32 Gap Analysis




















10


Accession Thereto

331 General Annex




Standard


Standard


Standard





Standard


Standard


Standard


Transitional


Standard


Standard


Standard


Standard

11

examination






Standard


Standard


Transitional








Transitional


Standard

12




Standard


Standard


Standard


Standard




Transitional


Standard


Standard




Standard




Standard

13






Standard




Standard





Standard


Standard


Standard


Standard




14


Standard


Standard


Standard





Standard





Standard


Standard


Standard


Customs



Standard


Standard

15





Standard


Standard


Standard


Standard


Standard


Standard











16






















Standard







17















Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard

18



Standard


Standard


Standard




Standard












19



















20










Standard




Standard












21



Standard


Standard
















Standard


Standard





22





Standard



Customs office

Standard


Standard


Standard




Standard




Standard





Standard

23
















Standard


Standard


Standard



escort

Standard


Standard



24






Standard


Standard






Standard


Standard








25



Standard


Standard




Standard


Standard




Standard


Standard








Standard



26


Standard




Standard




Standard


Standard





Standard





27






















28






Standard




Standard


Standard





Standard




Standard







29
















Standard




Standard


Standard





30



Standard


Standard




Standard


Standard


Standard


Standard


Standard


Standard







31

















Standard









32























33




Standard


Standard







temporary admission



Standard


Standard





Standard











34














Standard






Standard










35



Standard












Standard


Standard


Standard











36
















Standard









37
















Standard





Standard




Standard

38






d Chapter 4 Stores







Standard








Standard


Standard




Standard

39







Standard






Standard














40




















41








Standard



41 Background











42












bull 1st Stage


bull 2nd Stage


bull 3rd Stage





43
























44















50 Investment Plan

51 Objectives





Set


Advocacy Website


Php 200000000

45










500000000








Others

500000000


500000000





300000000


46

Annex ldquoArdquo













Errors Standard 339





47












N TCCP Sec 701 702 703

48



N TCCP Sec 3506











49

















50













Standard 322





51


Standard 323



Standard 326











52








Errors Standard 339



53














54














Standard 42


55


Standard 43




Standard 45



Standard 46 Payment



Standard 47





Standard 411


56

Standard 412












57






Standard 424



Chapter 5 Security

Standard 51



Standard 52





58

Standard 53



Standard 54



Standard 55




Standard 61



Standard 62



59

Standard 63




N same Standard 66




N E-Commerce Act



Standard 82





60




Standard 87



61

Annex B


















62







1a 1b 2 3 4 5


S 1 2 3 4







63








C-3 S-3








64






C-1 S-1

Standard 325








C-3 S-1

65








C-2











66








Special Procedure 1





67

Special Procedure 2








C-24


68






C-3







69










Standard 337



70












71















72



C-3

S Same as above

Standard 422


C-3

S Same as above

Chapter 5 Security

Standard 56




Standard 57



73





Standard 65






Standard 67



C-3 S4

Standard 68


74











Standard 72



75


Standard 73



Standard 74










Standard 81



76


S Standard 83



Standard 84


C-3







77




Standard 92






78


79

Annex C












Charges Standard 19












80






















Duration of stay

81






















82





















83















84

Arrival Standard 9





















85
















86










Standard 5



Standard 6


87



Standard 8









88
















89

Charges Standard 19









Standard 2







90













N Sections 1801-02

91












92









Standard 3


Standard 4


Standard 5


93

Standard 6


Standard 7













94

Standard 3






Standard 5




Strategy








95




Strategy









96













N Section 1905

97















98

Standard 7




Standard 8








Standard 12



99











Standard 17



100





Standard 20










101












Standard 10




102










Standard 24







103













104


















105














106





107





Standard 5










Standard 9


108





Standard 12











109







Standard 24




Chapter 3 Drawback




110










111

Standard 3












112





Standard 13










113





Overall Strategy







Standard 3



Standard 4




114







Standard 7





Standard 8



115













Standard 12


116


Standard 13














117







Standard 22









118

Standard 24



Standard 26













119







C-3 S-4

Standard 3









120








Standard 11



Standard 12



121

Standard 13



Entry Standard 18



Standard 19



Standard 20





122




Standard 22





Standard 30








123




Standard 35



Standard 36









124





Standard 7









125




Standard 4



Standard 5






126














127










Standard 16



128

Standard 17
















129












130
















131

















132





Standard 11










133















134








Standard 5








135

Standard 7



Standard 8












136

Standard 13



137

Annex D



1a 1b 2 3 4 5


S 1 2 3 4 5












138






















139






















Standard 4

140




















141





















Departure

142



















143

Standard 8











C-1




144




C-3

S-3







C-3 S-3




145

S-5 Reservation





C-1 S-5












146




C-1 S-5


Strategy










147







Strategy










dock facilities

148















S-5

149









C-3 S-3







150

C-1 S-5


Strategy















151
















152

declaration C-1 S-1
















C-1 S-5



153






C-1 S-5




C-3 S-3







154


S-1 S-5












155




C-3 S-5

Standard 11



C-3 S-3

Standard 12



C-3 S-3



156

















157










158







C-3 S-3







159











C-1 S-5




160

Standard 19






Standard 21








C-1

161





C-1 S-5












162











Standard 3






163










Standard 11


Standard 12


164

Standard 13




Standard 15








Chapter 3 Drawback





procedure

165








subtitutes








166







C-1 S-5







167


C-1 S-1















168






C-1 S-6

Not to Accept





169






C-3 S-3

Standard 6









170

















171










C-3 S-3






172





C-3 S-3








Standard 18



C-3 S-3

173











C-3 S-3




C-3 S-5

174










C-1 S-5



Coverage




Overall Strategy



175





C-3 S-3





C-3 S-3



176





C-1 S-5









C-1 S-5

177

Standard 25














178






C-1











179







Standard 24



C-3 S-3

Standard 25



180


C-3 S-3




C-3 S-3




C-3 S-3

Standard 28



C-3 S-3

181

Standard 29



C-3 S-3




C-3 S-3




C-3 S-3





182













C-3 S-3

Standard 5




facilities C-3 S-3

183









C-1 S-1




law


184









Standard 11



185










C-1 S-3






C-1

186








C-3 S-3



C-3 S-3



C-3 S-3

187

Standard 9


C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3

188

Standard 14


C-3 S-3



C-3 S-3

Standard 19


C-3 S-3





C-3 S-3


Recommendations



189







C-3 S-4

Standard 3











C-3

190











C-3 S-3






191




C-3 S-3








C-3 S-3

192













C-3 S-3

193


rsquo



194






INDUSTRIES INC









AND FORWARDERS INC




LINES


ASSOCIATION

195


OF THE PHILIPPINES







INC






COMPANIES


THE PHILIPPINES




196

ANNEX F







197



















198






of Goods












199

















200


201

Annex G









202

Annex H Annex An







203













204

Annex I













205
















206











Very truly yours


207

S E N A T E

PS RES NO ________












208



209

Abbreviation





TABLE OF CONTENT












Annexes


PREFACE


















i

EXECUTIVE SUMMARY
















ii




















3














Competitiveness






4









110 RKC Structure

1101 General Annex






5



















6






Not



Non-Compliant

Silent Provision









Specific Annex G

7





















8







extent possible




bull Standard 17










9






purchased are paid

32 Gap Analysis




















10


Accession Thereto

331 General Annex




Standard


Standard


Standard





Standard


Standard


Standard


Transitional


Standard


Standard


Standard


Standard

11

examination






Standard


Standard


Transitional








Transitional


Standard

12




Standard


Standard


Standard


Standard




Transitional


Standard


Standard




Standard




Standard

13






Standard




Standard





Standard


Standard


Standard


Standard




14


Standard


Standard


Standard





Standard





Standard


Standard


Standard


Customs



Standard


Standard

15





Standard


Standard


Standard


Standard


Standard


Standard











16






















Standard







17















Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard


Standard

18



Standard


Standard


Standard




Standard












19



















20










Standard




Standard












21



Standard


Standard
















Standard


Standard





22





Standard



Customs office

Standard


Standard


Standard




Standard




Standard





Standard

23
















Standard


Standard


Standard



escort

Standard


Standard



24






Standard


Standard






Standard


Standard








25



Standard


Standard




Standard


Standard




Standard


Standard








Standard



26


Standard




Standard




Standard


Standard





Standard





27






















28






Standard




Standard


Standard





Standard




Standard







29
















Standard




Standard


Standard





30



Standard


Standard




Standard


Standard


Standard


Standard


Standard


Standard







31

















Standard









32























33




Standard


Standard







temporary admission



Standard


Standard





Standard











34














Standard






Standard










35



Standard












Standard


Standard


Standard











36
















Standard









37
















Standard





Standard




Standard

38






d Chapter 4 Stores







Standard








Standard


Standard




Standard

39







Standard






Standard














40




















41








Standard



41 Background











42












bull 1st Stage


bull 2nd Stage


bull 3rd Stage





43
























44















50 Investment Plan

51 Objectives





Set


Advocacy Website


Php 200000000

45










500000000








Others

500000000


500000000





300000000


46

Annex ldquoArdquo













Errors Standard 339





47












N TCCP Sec 701 702 703

48



N TCCP Sec 3506











49

















50













Standard 322





51


Standard 323



Standard 326











52








Errors Standard 339



53














54














Standard 42


55


Standard 43




Standard 45



Standard 46 Payment



Standard 47





Standard 411


56

Standard 412












57






Standard 424



Chapter 5 Security

Standard 51



Standard 52





58

Standard 53



Standard 54



Standard 55




Standard 61



Standard 62



59

Standard 63




N same Standard 66




N E-Commerce Act



Standard 82





60




Standard 87



61

Annex B


















62







1a 1b 2 3 4 5


S 1 2 3 4







63








C-3 S-3








64






C-1 S-1

Standard 325








C-3 S-1

65








C-2











66








Special Procedure 1





67

Special Procedure 2








C-24


68






C-3







69










Standard 337



70












71















72



C-3

S Same as above

Standard 422


C-3

S Same as above

Chapter 5 Security

Standard 56




Standard 57



73





Standard 65






Standard 67



C-3 S4

Standard 68


74











Standard 72



75


Standard 73



Standard 74










Standard 81



76


S Standard 83



Standard 84


C-3







77




Standard 92






78


79

Annex C












Charges Standard 19












80






















Duration of stay

81






















82





















83















84

Arrival Standard 9





















85
















86










Standard 5



Standard 6


87



Standard 8









88
















89

Charges Standard 19









Standard 2







90













N Sections 1801-02

91












92









Standard 3


Standard 4


Standard 5


93

Standard 6


Standard 7













94

Standard 3






Standard 5




Strategy








95




Strategy









96













N Section 1905

97















98

Standard 7




Standard 8








Standard 12



99











Standard 17



100





Standard 20










101












Standard 10




102










Standard 24







103













104


















105














106





107





Standard 5










Standard 9


108





Standard 12











109







Standard 24




Chapter 3 Drawback




110










111

Standard 3












112





Standard 13










113





Overall Strategy







Standard 3



Standard 4




114







Standard 7





Standard 8



115













Standard 12


116


Standard 13














117







Standard 22









118

Standard 24



Standard 26













119







C-3 S-4

Standard 3









120








Standard 11



Standard 12



121

Standard 13



Entry Standard 18



Standard 19



Standard 20





122




Standard 22





Standard 30








123




Standard 35



Standard 36









124





Standard 7









125




Standard 4



Standard 5






126














127










Standard 16



128

Standard 17
















129












130
















131

















132





Standard 11










133















134








Standard 5








135

Standard 7



Standard 8












136

Standard 13



137

Annex D



1a 1b 2 3 4 5


S 1 2 3 4 5












138






















139






















Standard 4

140




















141





















Departure

142



















143

Standard 8











C-1




144




C-3

S-3







C-3 S-3




145

S-5 Reservation





C-1 S-5












146




C-1 S-5


Strategy










147







Strategy










dock facilities

148















S-5

149









C-3 S-3







150

C-1 S-5


Strategy















151
















152

declaration C-1 S-1
















C-1 S-5



153






C-1 S-5




C-3 S-3







154


S-1 S-5












155




C-3 S-5

Standard 11



C-3 S-3

Standard 12



C-3 S-3



156

















157










158







C-3 S-3







159











C-1 S-5




160

Standard 19






Standard 21








C-1

161





C-1 S-5












162











Standard 3






163










Standard 11


Standard 12


164

Standard 13




Standard 15








Chapter 3 Drawback





procedure

165








subtitutes








166







C-1 S-5







167


C-1 S-1















168






C-1 S-6

Not to Accept





169






C-3 S-3

Standard 6









170

















171










C-3 S-3






172





C-3 S-3








Standard 18



C-3 S-3

173











C-3 S-3




C-3 S-5

174










C-1 S-5



Coverage




Overall Strategy



175





C-3 S-3





C-3 S-3



176





C-1 S-5









C-1 S-5

177

Standard 25














178






C-1











179







Standard 24



C-3 S-3

Standard 25



180


C-3 S-3




C-3 S-3




C-3 S-3

Standard 28



C-3 S-3

181

Standard 29



C-3 S-3




C-3 S-3




C-3 S-3





182













C-3 S-3

Standard 5




facilities C-3 S-3

183









C-1 S-1




law


184









Standard 11



185










C-1 S-3






C-1

186








C-3 S-3



C-3 S-3



C-3 S-3

187

Standard 9


C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3



C-3 S-3

188

Standard 14


C-3 S-3



C-3 S-3

Standard 19


C-3 S-3





C-3 S-3


Recommendations



189







C-3 S-4

Standard 3











C-3

190











C-3 S-3






191




C-3 S-3








C-3 S-3

192













C-3 S-3

193


rsquo



194






INDUSTRIES INC









AND FORWARDERS INC




LINES


ASSOCIATION

195


OF THE PHILIPPINES







INC






COMPANIES


THE PHILIPPINES




196

ANNEX F







197



















198






of Goods












199

















200


201

Annex G









202

Annex H Annex An







203













204

Annex I













205
















206











Very truly yours


207

S E N A T E

PS RES NO ________












208



209